The health care marketplace is rapidly and sometimes chaotically evolving. The overall influence of payers is rising and the types of payers influencing health care access is diversifying. Any company hoping to compete and win in this “brave new world” must understand the “payer ecosystem” and learn to navigate through it. Best Practices, LLC conducted this research to probe how health care companies structure internal research groups conducting payer research, and it assesses what market research approaches are most effective and innovative for understanding diverse payer needs, preferences and decision-making. This study also examines what research techniques work best during all product lifecycle stages to ensure access for therapies through national, regional and government payers and through Accountable Care Organizations and Integrated Health Delivery Networks.

1. Best Practices, LLC Strategic Benchmarking Research
Increasing Market Access through
Innovative Payer Market Research:
Assessing New Tools & Technologies to Gain
Insight into Payer Decision Making

2. Table of Contents
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 Research Overview 3
 Universe of Learning 5
 Key Findings & Insights for Managing the Payer Ecosystem 7
 Mapping the Rapidly Evolving Payer Ecosystem 16
 Effective Tools & Technologies to Understand Payer Decision-making 26
 Key Trends in Managed Markets Contracting Research 36
 Key Trends in Payer Formulary & Tracking Research 42
 Understanding What Drives National & Regional Payer Decision-making 47
 Understanding What Drives Government Payer Decision-making 54
 ACOs & IDNs Are Rising in Importance 59
 Cross-Functional Collaboration & Communication Are Critical 67
 Optimizing Payer Research Structures, Roles & Resources 74
 Preparing to Compete in an Outcomes-oriented World 82
 Appendix 89

3. The Affordable Care Act has been the catalyst for dramatic change in US healthcare. The power
structures that influence this $2.8 trillion economic sector are shifting. This benchmarking field study was
undertaken to help life sciences companies keep pace with the rising influence of public and private
healthcare payers.
Regulatory, political and legislative changes are redefining the traditional
power structures among healthcare stakeholders. Increasingly, payer insights
drive a product’s success or failure.
Private and public payers are assuming greater power and control. In the
current and future marketplace, payer coverage, support or opposition are
tantamount to success or failure for a new bio-pharma product.
New technologies and rising expectations regarding health economics and
outcomes research are transforming how payers learn, educate themselves
and inform critical formulary and contracting decisions.
Some companies are farther along than others, investing more resources,
creating dedicated payer research groups, building risk models, etc. Today,
success depends on understanding where the power is, who pharma must
influence, and what influencing tactics will work with the new power centers.
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Shifting Sources of
Power & Influence
Payers Increasingly
Influence Product
Success or Failure
Bio-pharma Companies
Are Planning &
Reacting
Technology &
Outcomes Research
Transforming
Decision-making
Issue Background: Healthcare Insurers Are Gaining Power &
Can Influence the Destiny of Bio-pharma Products

4.  Prioritizing Players in the Complex Payer
Landscape: Which Payers Most Impact Your
Business
 Optimizing Your Payer Research Structure to
Capture Managed Markets Insights
 Market Research Resources for Conducting
Impactful Payer Research
 Engaging Payers & Harvesting Insights across
the Product Lifecycle
 Payer Landscape Research Activities & Timing
 Payer Contracting Research Activities & Timing
 Formulary Research Activities & Timing to
Gauge Payer Perspectives
 Effective Tools & Technologies to Capture
Payer Insights
 Future Trends & Lessons Learned in
Conducting Payer Research for Greater Market
Access
Research Objective: This evidence-based
benchmark study probes how healthcare companies
structure internal research groups conducting payer
research, and it assesses what market research
approaches are most effective and innovative for
understanding diverse payer needs, preferences and
decision-making. This study also examines what
research techniques work best during all product
lifecycle stages to ensure access for therapies through
national, regional and government payers and through
Accountable Care Organizations and Integrated
Health Delivery Networks.
Methodology: Best Practices, LLC engaged 38
executives and managers working in diverse payer-
focused functions through a benchmarking survey
instrument and field interviews. Research analysts
conducted executive interviews with five leaders to
collect qualitative data and insights.
Research Project Objectives, Methodology & Results
Best Practices, LLC conducted this benchmarking study to probe the rapidly changing specialty of
Managed Markets Market Research.
Topics IncludedStudy Overview
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5. Benchmark Class:
Universe of Learning: 38 Participants Contributed to this
Benchmark
Thirty-eight payer research leaders participated in this study. More than half of the participants
represent pharma or biotech companies, and another quarter come from medical device companies.
Five selected participants were interviewed to add qualitative depth to the study.
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Industry Representation
Pharmaceuticals/
Biotech
53%
Medical Devices 28%
Market Research
Agency or Consultancy
11%
Diagnostics 6%
Retail Pharmacy 3%

6. Managing the
Payer
“Ecosystem”
Understand & Manage the Payer Ecosystem
The healthcare marketplace is rapidly and sometimes chaotically evolving. The overall influence of
payers is rising and the types of payers influencing healthcare access is diversifying. Any company
hoping to compete and win in this “brave new world” must understand the “payer ecosystem” and
learn to navigate through it.
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3. Fully Collaborate &
Communicate Across
All Units Engaging
Payers
4. Start Earlier to
Understand Payer
Priorities &
Perspectives
5.Prepare to Compete
in an Outcomes-
Oriented World
2. Research Payer
Decision-making by
Segment Archetype
6. Reorient to Work &
Win in the ACO/IDN
Marketplace
1. Map Payer
Landscape to Segment
& Prioritize

7. 44%
47%
44%
33%
41%
32%
50%
35%
24%
24%
9%
6%
Value Proposition Testing - testing messaging/materials to convey
value a new medication will provide to patients
Payer "Landscape" Research to understand how payers evaluate
products in a therapeutic area
Burden of Illness Message/Presentation research – testing
prelaunch materials to educate payers on unmet need
Perception tracking of Company image and performance of Account
Executives and others who work with payers
Exploration of opportunities to support Accountable Care
Organizations
Research into implications of expanded access through HIEs among
payers who participate
Somewhat Effective Highly Effective
Many Approaches Are Employed to Study Payer Landscape –
But New Niches Challenge Most Companies
The most commonly used payer landscape research focuses on value proposition testing, Therapeutic
Area evaluation and Pre-launch materials testing. These approaches are highly effective for up to 50% of
companies. However, it appears many companies are still struggling with how to effectively examine new
niches, such as Accountable Care Organizations and Health Insurance Exchanges.
(n=31-34)
Q. For the following market research approaches, indicate the effectiveness of each for understanding payer thinking
and decision-making.
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Effective Market Research Approaches Examining the Payer Landscape:
Highly Effective - Other:
• Mock P&T Committee
research
• Payer and ACO
research to understand
gaps in data that could
limit access to product at
present and in
competitive future
landscape% of Responses

8. Payer Contracting Research across Payer Types Private
National
Payers
Private
Regional
Payers
Government
Payers
ACOs/ IDNs
Pricing Research 69% 61% 39% 22%
Contracting Strategy Research – by product or by portfolio of
products
69% 53% 39% 22%
Explore partnership efforts related to showing
better outcomes in a specified patient population
56% 42% 19% 39%
Track results of Patient Support/Adherence program offerings 42% 33% 17% 25%
Exploration of Risk-Sharing contracts 28% 22% 3% 19%
Many Explore Partnerships to Show Better Outcomes with
Private Payers & ACOs in Payer Contracting Research
Pricing research and contracting strategy research (by product or portfolio) are common approaches
across national, regional, and, to an extent, government payers for payer research groups. However,
nearly 40% of respondents indicated research to explore partnership efforts for showing better outcomes
in a specified patient population is underway to understand ACOs/ IDNs.
Q. Please indicate which of the following approaches your organization uses to understand payer thinking and
decision-making for the payer types listed.
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(n=36)

9. 6%
3%
24%
36%
12%
3% 3%
15%
30%
15%
3%
0%
7%
17% 17%
3%
0% 0%
10%
40%
9%
3% 3%
13%
41%
Pre-clinical Phase 1 Phase 2 Phase 3 Launch
Pricing Research
Contracting Strategy Research - by product or by portfolio of products
Exploration of Risk-Sharing contracts
Track results of Patient Support/Adherence program offerings
Research to Explore Partnership efforts related to showing better outcomes in a specified patient population
Pricing & Contracting Research Ramps Up at Phase 2 - Launch
Nearly a quarter of companies begin pricing research in Phase 2. However, 36% do not start until Phase 3.
In Phase 3, 30% of companies are beginning to examine payers’ contracting strategy. At launch, around
40% of respondents begin tracking results of patient support programs and exploring partnerships to
show better outcomes in patient populations. Benchmark interviews surfaced a clear signal that
companies should begin to research critical payer issues earlier.
(n=29-33)
Q. For each payer market research approach, indicate when your organization first begins employing the approach to
understand payers' thinking and perspective on pricing and contracting.
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Phases to Begin Payer Contracting Research:
%ofResponses

10. Numerous Issues Limit Pharma Understanding of ACOs
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Benchmark participants shared issues that create barriers for them in their efforts to understand ACOs,
IDNs and similar organizations. A key problem for pharma is recognizing what is and what is not an ACO
to ensure actual ACOs are represented on panels. Another issue is judging long-term ACO impact.
 It is difficult to determine which entities to include in market
research studies. For example, some entities identifying themselves
as ACOs are not registered with CMS. Should they be on panels?
 Vendors are not yet up to speed on vetting ACO participants for panels.
 ACOs are independent business ventures that do not behave
uniformly. Given typical small sample to sizes, how valid are
extrapolations about this segment—especially with regional segmentation?
 There are many different architectural types of ACO. There is no
algorithm for predicting which ones will remain in business and which will fail.
 ACOs are customized to geographic markets, introducing additional diversity to the segment.
 Lines between payer and provider are blurred in these large medical groups. They resemble payers but they are
not yet taking on pharmacy risk. It is unknown whether ACOs will drive share or just serve as a structure for
controlling costs.
 It is uncertain whether pharma will have any significant influence with ACOs. Said an interviewed executive: “I
don’t know if pharma has enough horsepower now to really influence the ACO space. We have to understand
what they are trying to accomplish in the ACO space—will they take on risk? Will they design their own
formularies? Will they drive share?”
Hurdles to Understanding ACOs and Their Potential Impact on the Pharma Business Model

11. Dashboard of Leading Indicators Signals Evolution into
Outcomes-Oriented World
Across multiple benchmarks in this study, a strong signal can be heard: Health Outcomes are
increasingly important! The signal is picked up in HEOR, CER and in leadership structures. Biopharma
companies must prepare to compete in an outcomes-oriented world.
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Effective
Outcomes
Research is
Increasing in 7 of
10 companies in
next 24 months
Innovative
Outcomes
Research is
Increasing in 6 of
10 companies
next 24 months
Patient-reported
Outcomes
Research is
Increasing in 5 of
10 companies
next 24 months
Research to Explore
Partnership efforts
related to showing
better outcomes in a
specified patient
population
48%
% RATING HIGHLY OR
SOMEWHAT EFFECTIVE
HEOR LEADERSHIP ON THE
RISE
• VP-level execs now often
lead HEOR
• HEOR specific roles
emerging for global &
national
• MMMR observed reporting
to HEOR and MM
OUTCOMES RESEARCH FUTURE TRENDS
COMPARATIVE EFFECTIVENESS RESEARCH FUTURE TRENDS
CER in
Crowded Market
CER vs..
Market Leader
CER
vs..Generics
CER
vs..FDC

12. Best Practices, LLC
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Chapel Hill, NC 27517
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About Best Practices, LLC
Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet
profound principle that organizations can chart a course to superior economic performance by studying
the best business practices, operating tactics, and winning strategies of world-class companies.
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