Handle with care

Dispensing doctors represent an unprecedented lever to gain competitive advantage in the UK pharmaceutical market. Despite this, a widely held view of dispensing doctors is that they are irrelevant: a relic from earlier times, surviving in isolated rural areas perhaps staffed by one GP and his dog! Nothing could be further from the truth.

In 1993, 15 per cent of GPs in England operated dispensing practices; 10 years later the figure had risen to 16.8 per cent. In 2006 there were 5,353 dispensing doctors in England, operating across 1,166 practices. These practices, far from occupying rural backwaters, are frequently to be found in thriving towns, because in order to dispense the practice only has to serve a proportion of patients who live more than one mile from a chemist. This takes in a large tranche of the population. In 1993, the average list size per GP practice in England was 1,902 of which 795 patients were dispensing patients. A decade later the average list size was 1,802 of which 701 patients (38.9 per cent) are dispensed to.

While dispensing doctors represent about one sixth of the UK market, it is a very active one sixth. Unlike conventional GPs, dispensing doctors diagnose, prescribe and dispense. The first two actions they share with the broader GP population, but for eligible patients, the dispensing doctor will both choose and dispense the medicine. They choose treatments from a limited range of preparations held in the practice formulary, which have been carefully chosen to balance efficacy, safety, cost and profit. Their skills have been honed over years of practice weighing the benefits of various brands, the incentives for generic prescribing and the vagaries of the drug tariff. Key watchwords at these practices are parity and profit. It is therefore no surprise that as the NHS embraces clinical governance, using it to drive standards, dispensing doctors represent a model of commercial governance; an exemplar in maximising patient benefit while balancing the constraints of cost and benefit.

Unlike their more traditional counterparts, dispensing practices often swiftly abandon the market leading medicine in favour of a more cost-effective choice; for example, why was lanzoprazole a brand leader in dispensing practices instead of omeprazole? Similarly, their role within the Primary Care Trust (PCT) is also different. Dispensing doctors have a vested interest in seeing that their view of the world is congruent with that of their PCT, therefore the presence and influence of dispensing doctors on PCT boards and prescribing committees far outweigh their numbers.

In fact as PCT numbers dwindle, the influence of dispensing practice grows. By 2003, 47 per cent of PCTs served a population of more than 160,000 patients. Since this date consolidation has continued to radically change the market structure and the latest figure on the Department of Health website states that there are currently 152 PCTs. More power in fewer hands, where dispensing doctors wield increasing influence.

In fact, as commercial governance becomes the new watchword, dispensing doctors become an increasingly important market driver. In this context, ignore dispensing practices at your peril, because in the last Dispensing Doctor Omnibus my colleagues and I carried out, we discovered that 76 per cent of dispensing practices served actively at their Primary Care Organisation (PCO); frequently on the prescribing committee.

Balance of power
This market consolidation and sharp shift in the balance of power is important because as PCOs become more influential, the viable commercial opportunities that they can potentially embrace within their remit increases sharply. The current commercial model within dispensing practice is based on retrospective discount: an idea already widely mooted within the NHS and publicised in the Task and Finish Group Report on Prescribing and the OXERA report. Congruent references can also be found in the Crown Report and The Right Medicine.

If we assume that the NHS mantra remains taking costs out of the system, then the retrospective discount model offers some very interesting possibilities. If, for example, the American model drug utilisation review is used to compare the various competing brands, before retrospective discount versus share models are applied, then the opportunity to both take cost out of the system and prescribe rationally is greatly enhanced.

The necessary guidelines are in operation, together with formularies to restrict choice so the framework is in place for a radical population-based system where PCTs could negotiate the cost of pharmaceuticals and trade market position for discount. This is, after all, what savvy dispensing practices already do today.

Under this increasingly likely scenario, dispensing practice becomes not a rudiment of times past, but an increasingly important driver of market change. Consider the following steps.

1. For each therapeutic area write a treatment guideline: This step has its origins in prescribing across the hospital primary care interface and saw evolution from a protocol deemed too restrictive to be a guideline. These 600-plus guidelines formed the backbone of the Prodigy system piloted from 1995.

2. For each step, list the available medicines and prescribe the cheapest first: This is already standard practice in a lot of practices. An observation confirmed by the Dispensing Doctor Omnibus where two-thirds of participants reported a shift towards prescribing the cheapest option first line.

3. Use two agents before switching to the next step: This generally has the effect of mopping up 80 per cent or more of patients, depending upon the condition (see the New Change Therapy Enquiry to map this position for your own product). In the previous Dispensing Doctor Omnibus, a third of doctors reported that membership of their PCO had led to a restricted choice of high-use category drugs and 25 per cent said that use of modified release products had declined.

4. Purchase commonly prescribed medicines in bulk: McKinsey estimates that less than 300 products will treat 90 per cent or more of primary care consultations. This coupled with the budgets for primary and secondary care being brought together, the common use of 28-day packs in both hospital and community settings and price differentials between the two, make this a very attractive step.

5. Establish retrospective discount purchasing agreements: These have been in place for years in the US and are referred to in the Task and Finish Group Report, A Spoonful of Sugar and the OXERA report which, contrary to belief, was not solely about generics but about the wider purchase and supply of pharmaceuticals.

The above scenario becomes increasingly likely under conditions of increasing market consolidation. The more consolidated the market, the more aggregated demand becomes and the more power flows away from the manufacturer in favour of the buyer.

Consider the facts: PCTs have aggregated demand, the wholesaler supply chain is under pressure, and leading companies have started to focus on the supply chain ñ witness the recent strategic moves by Pfizer and AstraZeneca. If the new NHS mantra is indeed commercial governance, then dispensing doctors represent the key base for gaining superior market position in order to achieve sustainable competitive advantage.

Commercial angle
Dispensing doctors are the commercial lynchpin for market change. If you do not deal actively with dispensing doctors then you are ignoring a major factor of influence within the PCT. The influence of dispensing practice is widespread, substantial and increasing.

It is important to consider the economics of dealing with a dispensing practice; do you need a whole army of reps selling the benefits of the product if the product is generally established and the main benefits are well known? Why settle for, at best, a five-minute reminder when a key account rep can meet for an hour with the GP in charge of the practice or address a group meeting and discuss relative benefits across a range of products, many of which are not actively promoted?

The Dispensing Doctor Omnibus showed that 29 per cent of formulary choices were made by the GP in charge of the dispensary and a further 43 per cent by collective GP decision. Just 7 per cent of formulary decisions were made by the dispenser.

The return is also greater because, once chosen, your product is one of a limited selection and will automatically get a bigger share of the practice cake than in a conventional GP practice. This is because dispensing practices do not distinguish between dispensing versus non-dispensing patients and all the GPs choose from the same limited formulary.

How can we improve our operating strategy with dispensing doctors? The last omnibus revealed that dispensing doctors see, on average, one to two reps a week, where the most important selection criteria are the ability to discuss commercial terms and the company's reputation. (Figure 1, page 31 shows the reasons why dispensing doctors see reps). This implies very different skills to the standard industry detail. A point reiterated in this omnibus where doctors were put off by pushy reps with a poor knowledge of dispensing practice (see figure 2).

The Dispensing Doctor Omnibus also highlighted that dispensing practices really don't like contract reps. In fact in our survey over 80 per cent of dispensing doctors either do not see contract sales reps or choose to see them much less frequently (see figure 3). The reason why is probably related to a general lack of knowledge of dispensing practice and their inability to negotiate commercial terms.

This partisan attitude is not however solely related to reps but also extends to companies, where our research showed that dispensing doctors liked dealing with Janssen-Cilag or Wyeth but generally they bought fewer products from Pfizer or MSD. In the new marketplace, the opportunities to overthrow pharma giants and win big are considerable.

Don't waste money employing a contract team to sell your products within dispensing practices. Invest instead in training your reps to read correctly the clues on show in the dispensing practice and adopt displacement selling skills not detailing skills. Time to influence is also more available within dispensing practice because the aggregate call pressure from industry reps is generally lower.

This represents a valuable opportunity to build experience and expertise within your salesforce in the key success factors of displacement selling, commercial negotiation and managing retrospective discount purchase agreements. These are after all the new skills that will be required to successfully compete under the new industry rules of engagement.

Instant access
Dispensing practice offers a route into PCTs. A conduit to market influence which will allow you to built a strong market position for the future. These tectonic plates of market change are shifting fast and success will come to the activist who seizes the opportunities on offer by new commercial arrangements and has the vision to both pursue them and to propose new options.

Under this scenario information and market understanding is the key where dispensing doctors offer a far better return on your promotional investment money in versus money out, as compared with traditional GP. There is greater return per call, more control over parallel imports, less promotional noise to contend with and a bigger slice of the market; not to mention the multiplication that you can apply to all these factors in terms of influence: influence that extends far beyond and will far outweigh their numbers and the sixth of the market that they nominally appear to control.

Dispensing doctors punch far above their weight and represent a significant opportunity to gain a better control on the demands of imminent market changes in the NHS which represent a paradigm shift in the rules of influence and engagement within the UK pharmaceutical industry.