Contracting Strategy Development using Qualitative Conjoint to Segment Community Oncology Practice Managers

NOTE: Our client gave us permission to use this case only if the company name and specific agent category was anonymous and we altered certain identifying facts.

Abstract

Client viewed contracting with private practice oncologists as a key to competitive success for their third-to-market agent. RG+A conducted a Qualitative Conjoint exercise, where each conjoint “card” presented a simplified contract, complete with calculations an oncology practice manager might use. We ran the conjoint first and the qualitative portion second. This order enabled us to segment oncology practice managers into two groups: Profit Seekers and Loss Avoiders. The two groups demonstrated clear and significantly different preferences in contracting. This information allowed Client to develop a contracting strategy that achieved goal by focusing on the Profit Seekers while still attain acceptable share from the Loss Avoiders.

Background

Client prepared to bring a third-to-market agent into an oncology market in 2010. Client identified private practice oncologists as their preferred target and contracting as a potential competitive advantage. As part of their contracting strategy development, the Client asked RG+A to run a choice exercise to pinpoint the contract features that influenced decisions. However, timing and availability dictated a sample of no more than 30 practice managers.

Methodology

RG+A executed a qualitative conjoint with 30 oncology practice managers. Since oncology buy-and-bill contracts tend to be fairly complex, the first challenge was to determine which contracting variables were inherently correlated and which could be independent. We identified five pivotal independent variables that the Client would consider: WAC price, cost recovery, rebate level, payment terms and patient support programs. Next, we developed an algorithm that enabled us to convert these variables into complete sets of contract terms and calculations, incorporating other variables such as dating as fixed elements of the contract. Each oncology practice manager reviewed eight “contracts”.

One key issue when designing a Qualitative Conjoint exercise involves deciding which element to complete first. Since we were confident in our ability to capture all the conjoint variables, we decided to run the conjoint first. The qualitative interviews focused primarily on the oncology practice manager’s rationale behind each contract score and the key trade offs. It also touched on the practice’s general philosophy on contract management, the oncology practice manager’s role in the contracting process, and the importance of the drug class to practice economics.

RESULTS

Conjoint analysis of the 30-person sample revealed no key trends and minimal significance. However, we learned in the qualitative interviews that the group divided neatly into two camps. One group viewed contracting in this category as an opportunity to maximize revenue. The other simply managed contracts to avoid any potential loss due to dating, lack or reimbursement, etc.

When we divided the sample based on goals, different and clearly significant patterns appeared for the two groups. In simple terms, Profit Seekers focused on net cost recovery, while Loss Avoiders focused on WAC price a lower price. The two groups scored virtually identical on the other variables, with rebates clearly more important than payment terms or patient programs.

Guidance_CaseStudy_Table

GUIDANCE

The model suggested that Profit Seekers group offered larger opportunity for our client, but not quite enough to meet launch targets. We worked with the Client to develop a contracting strategy that would perform extremely well in the maximize Profit Seeker share while maintaining sufficient share with Loss Avoiders to make the revenue target attainable.

ACTION

Our client developed a contracting strategy based on the conjoint results. To date, it has performed as expected in the market.