KAM Prescription for Commercial Success
A new whitepaper explores the evolution of the KAM model among leading pharma organizations in response to the changing dynamics in the US healthcare sector. Nick de Cent looks at some of its conclusions.
Current trends in the US healthcare marketplace show no signs of slowing down. As independent practitioners are swallowed into consolidated networks and healthcare reform changes pay structures to be more outcomes dependent, Key Account Management can only become more important for the success of the pharmaceutical industry. That’s the conclusion of a new white paper, KAM Prescription for Commerical Success, that sets out the views of KAM thought-leaders and gathers insights from last year's eyeforpharma Philadelphia Summit .
KAM Prescription for Commercial Success establishes four key findings:
- KAMs must not simply be sales representatives with a new title. Instead, allowing KAMs within an organization to be viewed as “above brand” or brand agnostic will give additional beneficial insight into the new major players in the marketplace.
- Hiring KAMs with adequate business intelligence to manage all the roles they are required to perform is a prerequisite for effective engagement with these organizational clients.
- Management focus for the proper investment in the routine and evolving training of KAMs, marketing teams and scientific advisors to specifically tailor solutions for their unique clients is essential to success. Determining a proper incentive compensation structure aligned to the specific clients each KAM serves, in order to drive effective account management with new unbranded, non-TRx-focused* goals will help keep an organization’s KAMs focused on proper engagement with their accounts.
Changing healthcare landscape
Following well-documented changes in the US healthcare landscape, many independent primary care doctors have begun to consolidate themselves into integrated delivery networks (IDNs). “The sustainability of the classic share-of-voice model has diminishing returns at this point,” according to Dwayne Dixon, Director of Customer Engagement at Alcon. As a result, doctors are no longer the primary targets for engagement by sales reps.
IDNs are governed by a C-suite of executives who inform decisions based not just on medical expertise, but also on a variety of business concerns that arise from changes in healthcare payment models. Selling to these clients requires a vastly different set of skills and capabilities from selling to individual physicians. Furthermore, this is a trend that is slated to continue, especially since the Affordable Care Act.
Incentives, including Medicare’s Hospital Readmissions Reduction Program, are driving healthcare providers to focus on making care more accessible, and more coordinated along the continuum, in order to avoid unnecessary patient stays and treatments.This also serves to reinforce the trend that individual doctors will no longer be the primary point of engagement for pharmaceutical sales reps.
Other factors have influenced the consolidation of HCPs and triggered a movement away from the share-of-voice sales model. For instance, technology development has allowed for significantly more information sharing, thanks to Electronic Health Records, which enable secure patient information sharing from office to office, or from site-of-care to site-of-care. Meanwhile, patients continue to become more engaged in their own health and wellbeing.
“The pharmaceutical industry’s biggest challenge, as IDNs become prevalent, is maintaining relevance in this era of more sophisticated buying processes and systems,” argues Matt Pitzel, KAM National Lead and Senior Director of US Commercial Effectiveness at Pfizer.
Indeed, treatment decision-making is rapidly shifting from individual physicians to a diverse spectrum of institutional customers. Instead of hospitals, this new network has IDNs. Instead of only basic payers, the network also has pharmacies and health benefit management companies. The more sophisticated payers and IDNs are also heavily invested in building such capabilities.
Outcomes and value
As we seek higher quality and more reasonable cost, the nirvana, from our point, is to provide these customers with the information that they want, when they want it, in a medium that is familiar and comfortable to them, [and] that allows them to engage in their healthcare improvement".
The growth of these institutional customers has required the development of new models of engagement for pharmaceutical companies. These involve multichannel marketing, medical science liaisons and account managers.
In addition, the old method of product value being determined by trials against a placebo is gone. Today, product value should be determined by real-world outcomes data, benchmarked against a gold standard. Customers and providers want the products and services they buy to be based on such data, and, preferably, their own patient data.
Providers are now guided by treatment protocols and measured on outcomes created by committees at the head of the care institutions. According to Scott Black, a Key Account Manager from Daiichi Sankyo: “The physicians have a boss now; they are held accountable and, as these decisions are forced downwards, we need to make sure we are calling on the right people to make sure that formulary and protocol are understood. We also need to bring something to the table besides medication.”
Furthermore, payers are demanding to see more evidence of the value of the products they purchase. As the cost risk shifts from payer to provider, the business model for the typical payer is moving towards quality and outcomes-based reimbursement.
“As we seek higher quality and more reasonable cost, the nirvana, from our point, is to provide these customers with the information that they want, when they want it, in a medium that is familiar and comfortable to them, [and] that allows them to engage in their healthcare improvement,” says Stephen B Bonner, an Executive Chairman at the Cancer Treatment Centers of America.
Steve Linn, the Chief Medical Officer and VP of Academic Affairs for the Inspira Health Network, adds that information about why the drugs coming to market are going to be more expensive will be immensely valuable to IDNs.
As the marketplace becomes more sophisticated, physicians, payers, patients and organized providers are all important. The KAM model offers pharmaceutical companies the ability to focus on all these new players in the marketplace.
KAM versus traditional sales
The KAM role is quite different from that of the sales rep: it is to forge relationships with large institutions; the KAM focus is not on doctors; instead, it is on decision makers within these organizations. At the same time, KAMs have to provide solutions, advice, and joint value propositions that typically are not involved in a standard sales pitch.
Accordingly, KAMs specialize in system-wide knowledge of their key accounts. They aim to find out more about how these institutions are prioritizing health outcomes and try to create a joint value proposition between companies.
Account selection process
A key issue for the KAM team is to correctly identify accounts that would actually benefit from a KAM-type approach. McKinsey and BCG offer proprietary algorithms to help identify accounts where KAM strategy should be applied. In fact, McKinsey reviewed the hospital landscape in a large European country and identified only 20 accounts that showed promise from a KAM perspective. The metrics such companies offer are generally focused on size of the IDN, complexity, alignment of targeted disease states, and organizational structures that are amenable to KAM.
The account selection process has turned out to be highly nuanced for a variety of pharmaceutical companies. In addition, IDNs indicate that an explanation of what pharma companies could bring to the table in terms of working cooperatively would be immensely valuable to them.
A consensus among the majority of the KAMs interviewed was the need for the creation of unbranded initiatives. “Market expansion projects represent the majority of what our KAMs focus on, of course in areas where we have a specific interest, knowledge or capability. Brand development has to be done carefully and transparently, as the KAM is typically introduced as more business-focused,” explains Bob Brinker, Key Account Manager at Pfizer.
A KAM is a different type of salesperson. Although KAMs typically come from a sales background, the role requires a significantly enhanced skillset:
- KAMs must be able to engage in B2B discussions in order to help craft solutions based on an organization’s specific business needs.
- A KAM must be entrepreneurial and able to understand the overarching market dynamics and healthcare economics that govern decision making for these large organizations.
- They must be familiar with the specifics of each disease state and patient population; understand how products address clinical needs; and be able to identify differentiating profiles between competing products.
- Finally, a KAM must be able to align cross-functional teams on key customer needs, account objectives, and the resulting plan of interaction with the key accounts.
KAM requires the formation of a more symbiotic relationship with HCPs and substantially more access to information. Therefore, attaining highly functional teams requires significant managerial focus and initiative. This focus by senior management should aim to allow for an organization to establish clear reporting structures, to have a substantial investment of time and money, and to engender an understanding of how to incentivize KAMs properly.
KAM team development
Two consistent needs mentioned by the companies with more mature KAM teams are: a managerial focus to shift sales ideals from only brand engagement; and the consistent training of their KAMs to build core competencies.
A major requirement of KAMs is not to focus on branded initiatives, but to look at market expansion and business metrics that are visible only beyond the pill. For instance, instead of measuring performance against individual sales targets, GSKassesses performance and determines bonus structures primarily on a few factors.
Across the industry, these may vary from account to account for a KAM. Pfizer, for instance, asks its KAMs to write a business plan based on customer needs, and many teams use management by objectives-based (MBO) incentives.
Customer feedback more important than ever
Surveys among key accounts provide a wealth of information on how KAMs are performing. Pfizer, for example, conducts an annual survey with five simple questions across 600 key accounts.
Current trends in the healthcare landscape mean the KAM role will become increasingly important. “There are going to be winners and there are going to be losers” as the marketplace shifts, a KAM from one large pharmaceutical company stresses.
With a properly organized KAM system – a new sales mentality focused on bigger picture ideas and how specific customers operate – a pharma company will be able to navigate the changes in their marketplace and, ultimately, become one of those winners.
*non-total prescription focused
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