We spoke with Richard Charter, Head of Market Access & Pricing at BD Diabetes Care EMEA, to discuss the challenges involved when integrating market access into strategic planning.
Can you tell us how you started you career in Market Access?
I graduated in Canada with an undergraduate in management economics and public policy and then worked with a bank in Canada for about 9 years in the private wealth management sector as a licensed portfolio manager. I was given an opportunity to come to Europe in 2013. I opted to complete a Masters in International Healthcare Management, Economics & Policy (MIHMEP Program) at Bocconi University in Milan.
It was during this masters that my interest in the market access space peaked more concretely. During the course of the program, I had to choose whether to go into the pharmaceutical space or the medical device space. I found medical devices far more dynamic and much more interesting. I then moved into a position at BD in market access and pricing, which seemed like a perfect fit, and two years later here I am.
What aspects from your previous experience help you today in Market Access?
My previous position was to get a value proposition out to the stakeholder making the economic decision, which is essentially identical to what I am doing now, only in no other industry is it actually called ‘market access’.
There is a strong marketing/sales/value articulation component to that, which, to me, is exactly what market access needs to do towards payers in healthcare. We need to understand things in economic terms, communicate it to payers in a way that’s important to them and make sure it is aligned with our clinical outcomes for patients. The only difference there is the clinical outcome. My previous position focused more on the rate of return on an investment as opposed to a clinical outcome, but the mechanism and infrastructure to communicated this is identical. One is more financial economics based, the other is health economic based.
What are your role and responsibilities at BD?
I am head of market access and pricing for the diabetes care franchise. I cover EMEA (Europe, the Middle East and Africa) and I break it down into two components; 1) the pricing side and 2) the market access side. The pricing side focuses more on our ex-factory prices and how we manage those internally to optimize revenue under the product lifecycle curve. The market access side is the stakeholder or payer engagement and making sure that the reimbursement side of the price waterfall is managed in a holistic and robust way, such that it doesn’t start to impact our ex-factory prices.
In your opinion, what are the key market access challenges for medical technology companies?
Until recently, medical technology companies never had to engage with payers. This is a new phenomenon, whereas the pharmaceutical companies have been going through this for 15-20 years. It’s only been in the last 5years that medical device companies have really begun to feel pressure on their pricing.
What’s causing these challenges is systemic to healthcare in general. First off, we had the financial crisis in 2008. That hit the very high level budgets that could be allocated to overall healthcare spending. That then filtered down into pharmaceutical focus on budget cutting, and it then turned to medical device prices. This also coincided with the increase in prevalence of chronic illness due to aging populations and (for diabetes) sedentary lifestyles. Because medical technology companies have never typically had to focus on the payer, internally the structure of most companies itself is not equipped to engage with payers. That means there is a dynamic where there is an external pressure on pricing not aligned to internal capabilities until very recently. The natural outcome of this mismatch is an erosion of pricing, which is what we see across the industry.
I always quantify this in terms of the ‘revenue = price x volume’ equation in two ways. First, from a manufacturer perspective; medical technology companies have always engaged with the stakeholders that drive volume and rarely have they engaged with the stakeholders that set price; this will inevitably change. Second, from a healthcare system point of view, it is the same equation, but in this case it’s ‘cost = price x quantity’. Manufacturer revenues are healthcare costs. As mentioned above, from a healthcare system point of view, quantities are driven by the rise in chronic illness and an aging population. This, combined with smaller government budgets, means price becomes the only way to have control over overall system costs. This materializes with manufacturers in their price levels. Manufacturers will have to adapt their commercial strategies to acclimate to this, and that is where Market Access and Pricing will play a crucial role in the future of value articulation. Payers will require similar resources to patients and prescriber, and this is the Market Access and Pricing function.
How you are developing the market access at BD?
My goal is to frame the function around the conversation above, and ensure payers are given a holistic approach. In this sense, I believe market access is more strategic than tactical. There are tactical deliverables, but, when we look at it from a company perspective in terms of the equation ‘revenue = price x volume’, we need to maximize this equation for our stakeholders. Market access looks after the price-setting stakeholders and ensuring we are fully aligned with our clinical and marketing segments with respect to value propositions and price levels. This is important so we can then take that message to price setting stakeholders in a way that is important to them.
Which areas do you collaborate with at BD?
I think market access is less of a function and more of a mindset across the company, ensuring ‘payer focus’ is where all of the functions need to come together. The key inputs to that are our clinical and medical team, who drive our core value proposition for our patients. Then the HEOR team are engaged to ensure that the clinical messages are aligned to our economic ones, so we understand what these outcomes mean for cost savings to the system. Then we need to get the marketing team engaged to get the appropriate message and value proposition delivery and public policy to make sure that the awareness is raised on the therapeutic areas at a government level. Last but not least, there is the reimbursement and analytics side as well. All of this should be completely dependent on a strong fact-base so that what we define as unmet needs actually is an unmet need for our external stakeholders. All of these stakeholder have a crucial role in this.
Is there a particular phase of the product development when you start developing market access strategies?
There is the question as to ‘when does it happen’ and ‘when should it happen’? Healthcare is a very unique industry with respect to pricing and marketing access, because the person prescribing the product versus the person using the product is different than the person paying for the product. It’s the only industry that works like that.
In my opinion, you should think about who is going to pay for a product in the R&D phase, the absolute beginning. This makes good business sense. Once there is proof of concept established, we need to almost immediately think about who is going to pay for the product, how much will they pay for it and does that align with other patient and prescriber stakeholders. If we don’t factor in who the payer will be, it can be a significant challenge for bringing a product to market. Just from a manufacturing cost perspective, we could be pricing ourselves out of the market before product development even begins, and conversely we could be leaving a lot of money on the table if we don’t price the product at the right level and there is more willingness to pay than we initially assumed. I think market access should come in as early as possible and certainly in the product design phase to establish a payer unmet need.
Overall, what are some aspects that companies must consider when developing their products’ pricing strategy?
When a company is creating a strategy, it needs to be top down and consistent throughout, but have strong input at the local level – especially for medical devices where payers are very locally driven. Pricing strategy, whether we talking about ex-factory prices, distributor prices, pharmacy prices reimbursement prices, cannot be delivered on if they are not coming from a congruent messaging from top down, with strong feedback locally. However the ultimate pricing strategy needs to come from the top layers of management to filter into the local levels.
GlaxoSmithKline did an interesting case study where they targeted a risk adjusted return on R&D. When that came from the CEO, it changed their entire pricing structure. Having that alignment from the top is crucial. The idea is that everyone understands why we make certain pricing decisions and what exactly they mean to the organization. Secondarily, it all has to stem from the unmet need from the patient. If the patient unmet need is not satisfied, why should the healthcare system pay for it? Do the products we’re designing really have value in the ecosystem? If they don't, that will undoubtedly translate into much lower prices. I think it’s having strong internal alignment with strong alignment to your external unmet need. If those two come together, I think you can have a pretty robust pricing strategy.
How do you see the role of external partners in that type of collaboration?
I think it’s very important to engage with payers early and often. I think you need to payer advisory boards to make sure that the internal definition of the unmet need is aligned to the payers, but I’d bring the clinicians in as well to make sure they are prepared to use the product you are offering and to check if it satisfies an unmet need for the patient. All of those external stakeholders help you gain market insights in some shape or form.
External consultants in my opinion serve as a critical and an objective voice. In many cases, many companies get too passionate about what they have created themselves, or they have misread the external market dynamic, perhaps because they have been in a certain area for so long. I think having an external partner can help facilitate that dialogue to remove any blinders and to make sure all the market opportunities are recognized.
How did you get in contact with ValueConnected?
I got in contact with ValueConnected through an industry conference. Ernesto, the Director of ValueConnected, gave a presentation which resonated with me about connecting value to the unmet need of the patient and physician. I followed Ernesto after that and, when I started with BD, I thought, this is the type of messaging we need to bring internally. We need more people who have go-to-market experience through a sales background, who are ideally dedicated to medical devices and who understand the market access space. If those three criteria are met, to me that is a winning combination for market access excellence.
How was your overall experience working with us?
Ernesto is incredibly responsive and very constructive. He will push back and provide an objective opinion if needed. He is very personable so he resonates with the people in the room. I think one of the reasons for that is the international focus and the content is there to really help people understand. Some of our marketing counterparts attended the commercial leadership forum and proactively came to me and said I should see Ernesto’s presentation. When I heard that and they heard that I had already engaged with Ernesto before, they were very encouraged to begin working with ValueConnected. It’s a very win-win situation and I’m positive about the interaction with ValueConnected thus far.
Lastly, what do you envision are the next steps after working with ValueConnected?
We need to keep pushing forward with our market access strategy and I’ll let the results speak for themselves. If we create something positive here, then I’m sure countries and our leaders will want to engage more. In fact, we’ve already begun to see that.