Healthcare negotiations: Creating change from within
A discussion between this three-party, three hour, multi-issue contract negotiation is among representatives for an HMO and two pharmaceutical companies over the purchase of a new antidepressant drug.
Hopkins HMO is the largest independently managed health care organization in the region. PharmaCare, Inc., a newly-formed pharmaceutical company, has just introduced “Profelice,” the first commercially-approved antidepressant treatment of its type. Profelice is expected to replace Prozac and Zoloft due to increased efficacy and reduced side effects. The Managed Care Representative for PharmaCare and the Pharmacy Director for Hopkins HMO have held several preliminary meetings over a contract for Profelice, but have made no commitments. The key issues to be negotiated include market share target tiers for Hopkins HMO, the discount pricing schedule for Profelice, marketing support, Profelice’s formulary status, and the length of the agreement. The PharmaCare Managed Care Rep and the Hopkins HMO Pharmacy Director are meeting with PharmaCare’s Contract and Pricing Manager to try to finalize the agreement. Major lessons of this simulation include:
- How perceptions of power can affect an agreement,
- The importance of understanding interests to developing a mutually beneficial agreement,
- The process of creating and claiming value,
- The effect of the relationship on the agreement and vice-versa.