Hospital-Retail Spillover

The hospital is just one site in the vast continuum of care. Therapies initiated in the hospital carry beyond the confines of the facility and are at times eagerly embraced by physicians practicing in their private offices. Knowing just how much of that hospital-retail spillover is occurring for a given drug or therapeutic area provides invaluable clues to the marketer when articulating the company's strategy and tactics across the institutional and retail segments.

Spillover Definition

Hospitals A and B are identical in all regards except for their utilization of the product. Also both neighborhoods get the same level of detailing of the product.

How Pharma Companies are Leveraging Spillover

Establish Real Value of a Rep

• Sales force sizing
• Promotional resource allocation (hospital, retail, hospital/retail)
• Incentive compensation/ Territory Alignment

• Estimate additional retail business due to drug on hospital formulary
• Assess ROI/NPV of managed care contract

• Implement more protocols vs. leveraging existing protocols
• Choice of protocol (in-treatment vs. discharge) and unit in hospital (OR, ER, telemetry, etc.)

Measuring the "True" ROI: The Slithery Return

While the invested amount is perfectly known, the return is not. Indeed, part of the return takes place in the hospital (straightforward but potentially negligible) and the other part in retail (difficult to measure but potentially very sizable).

Directionality of Spillover:

Why does spillover have to flow from hospital to retail and not vice versa?

• Hospitals dispense drugs based on their formulary
• Retail physicians dispense drugs based on the patient's MCO's formulary

• Many are on the teaching faculty
• Have access to state-of-the-art equipment and technology
• As such, retail physicians look up to them for cues regarding therapies to dispense