Launching a Hospital Product

A guide for Pharmaceutical Companies

By Martin Trautman - managing director, Maya Desai - associate director and Dezhi Kang - managing consultant, Navigant

While hospital drug expenditures represent a substantial market for the pharmaceutical industry, manufacturers face an increasingly complicated market environment. Key trends profoundly impacting hospital product launches include:

  • Increasing scrutiny on hospital pharmacy spending: Hospitals are increasingly using formulary to manage inpatient and emergency room (ER) products — as well as non-self-administered outpatient products—to enhance patient safety, improve care quality, and help control costs.
  • Value-based payment models: Many hospitals — especially major academic and large community institutions — are likely to pursue Medicare and commercial payer value-based reimbursement programs, such as accountable care organizations, bundled payments, or clinically integrated networks. This transition will force providers to adapt and evolve to new reimbursement mechanisms focused on clinical evidence, rather than on the volume-based contracting of the past.

Key success factors and strategies in a value-based reimbursement environment

To achieve successful commercialization, companies looking to launch a hospital product will need to understand the four critical success factors of a value-based reimbursement environment, and create a robust strategy to address each.

  1. Demonstrate clear clinical and economic benefit to both hospitals and payers
  2. Understand and prioritize reimbursement opportunities to ensure appropriate product coverage
  3. Advocate to hospitals to include in formulary, budget for, and store the product
  4. Gain maximum hospital adoption

Manufacturers should develop strategies to address these factors, such as:

  • Promoting guideline inclusions to positively influence the adoption of a hospital product.
  • Leveraging influencers and decision makers for hospital formulary access to encourage the product’s use throughout the department once it is on formulary.
  • Conducting workshops or speaker programs to educate department members on product administration and use.
  • Continuing to publish real-world evidence of the product’s clinical and cost-effectiveness.
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