Executive Spotlight: A Conversation with Alex Azar

This executive spotlight features a conversation with Alex Azar, former President of Lilly USA and former Deputy Secretary of the U.S. Department of Health and Human Services (HHS), focusing on the profound shifts impacting pharmaceutical commercial operations, particularly concerning specialty medicines and the evolving payer landscape. The discussion establishes that the rise of targeted, often higher-cost injectable specialty medicines is fundamentally changing the demands placed on pharmaceutical sales representatives and medical teams. Azar argues that this shift necessitates a move away from traditional product selling toward a sophisticated, account-based selling model, emphasizing Key Account Management (KAM).

The core transformation identified is the elevation of the sales professional's role from a mere conveyor of efficacy and side-effect information to a "broker of capabilities." Due to the complexity of specialty products, sales reps must now be deeply conversant in a wide suite of non-clinical issues critical to the physician's practice, office staff, and patients. These essential capabilities include reimbursement navigation, copay support, patient support programs, hub services, and adherence programs. Azar strongly refutes the notion of the "death of the sales rep," asserting that the human relationship remains the critical lynchpin of trust. However, he stresses that this human element must be supported by a robust technological ecosystem—a "360 platform"—that provides the necessary services and education, or acts as a substitute in low-access environments.

Azar posits that the truly effective sales professional of the future will function much more like a Major Account Manager, viewing the doctor’s office or the integrated health system as an account to be serviced and advanced. In this new paradigm, the "selling aspect" is significantly diminished, replaced by the functions of educating, challenging, and serving as a comprehensive resource. While technology and multi-channel marketing are acknowledged as major trends, Azar identifies the single biggest, most lasting impact on the pharma industry as the revolution in payer power and control.

The final segment of the conversation focuses entirely on the unprecedented control exerted by large payers and Pharmacy Benefit Managers (PBMs). Azar notes that over the last five years, payers have demonstrated an undeniable ability to control and move market share, prefer drugs, and place products in non-formulary status without experiencing significant customer leakage. He cites the CVS deal approximately six years prior, which locked down the national formulary, as a pivotal moment that disproved the long-held industry belief that large employers would resist formulary disruption for their employees. Consequently, the primary struggle for pharmaceutical companies is shifting from gaining market share to preserving "gross-to-net" profitability to sustain the flow of innovation.

Key Takeaways: • Evolving Role of the Sales Professional: The specialty medicine landscape requires sales reps to transition from focusing solely on clinical data (efficacy, side effects) to mastering a complex suite of non-clinical support services essential for the physician's practice and patients. • The Sales Rep as a "Broker of Capabilities": Modern pharma reps must be experts in reimbursement, copay support, patient support programs, hub services, and adherence programs, acting as the face and entry point for the company's massive global resources. • Shift to Key Account Management (KAM): The future of pharmaceutical commercial engagement lies in treating the physician's office or integrated health system as a major account that requires continuous servicing, education, and resource provision, rather than transactional selling. • Technology as an Essential Enabler: While the human relationship remains vital, it must be supported by a comprehensive "360 platform" of technology, services, and education; this platform is necessary to empower the rep or to serve as an alternative channel where physical access is limited. • Payer Power is the Dominant Industry Trend: The single most impactful trend affecting the pharmaceutical industry is the revolutionary increase in payer power, control, and ability to manage formularies and market share without significant customer disruption. • Gross-to-Net Preservation is the New Battleground: The primary challenge for pharmaceutical companies is shifting from the traditional goal of gaining market share to the critical need to preserve gross-to-net revenue to ensure product profitability and sustain future R&D innovation. • Disproving the Customer Leakage Myth: Historical assumptions that large employers would prevent PBMs from aggressively controlling formularies (due to fear of employee disruption) were disproven by major industry events, such as the CVS national formulary lockdown. • Consumer Willingness to Accept Restriction: In individual and Part D markets, consumers have demonstrated a willingness to accept lower premiums in exchange for plans that feature higher control and more limited formularies, further empowering payers.

Key Concepts:

• Specialty Medicines: Typically defined as higher-cost, often injectable products that target specific molecular validated targets, requiring specialized handling, administration, and patient support.
• Key Account Management (KAM): A strategic approach where the pharmaceutical company focuses on developing deep, long-term relationships with key customers (e.g., large integrated health systems, major physician groups) viewed as accounts to be serviced and advanced.
• Gross-to-Net: The difference between a drug's list price (gross) and the actual revenue received by the manufacturer after accounting for rebates, discounts, fees, and other price concessions (net).
• Payer Power: The increasing ability of insurance companies, PBMs, and government programs (like Medicare Part D) to control market access, formulary placement, and pricing leverage over pharmaceutical products.