Case Interview Practice Case #3: Increasing Drug Adoption
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- เผยแพร่เมื่อ 3 ก.ย. 2020
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This is a case interview practice case that you can do on your own without a case interview partner. This practice case is similar to first-round and final-round case interviews at consulting firms such as McKinsey, BCG, Bain, LEK, Deloitte, and Accenture. This case is a pharmaceutical drug patient adoption case.
In this consulting practice case, you'll develop a case interview framework, solve quantitative problems, and answer qualitative business before delivering a case recommendation.
This case comes from Hacking The Case Interview’s comprehensive online course. If you find this case interview exercise helpful, check out our full case interview course.
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The data is not clear. People with hypertension and people at high risk cant be substracted as they are not the same, and you cant consider them as the same as the 100M are already sick, so you cant change that. It is impossible to be cheaper if you already have 100 M with hypertension and you still have to add those of high risk.
Are you good in this ,will you teach me
Insurance companies never cover a new risk without adjusting the premium. Moreover this case is concerned with those costs where the existing policyholders with high risk will get hypertension and the company will have to pay for the treatment. That is basically how the insurance companies calculate their risk and earn money.
without hypertos: 100m currently with hypertension + 50m at high risk = 150m cases of hypertension = 1.5T in treating Hypertension.
with hypertos: 100m currently with hypertension + 50m who receive hypertos (20 percent of which contract Hypertension anyway), total costs would be = 100m*10k + 50m*5k + .2*50m*5k = 1.35T , for a savings of 150bn (same savings, different costs as video)
The problem is worded poorly as the 100m is stated to Since Hypertos prevents, and does not treat, hypertension, it is reasonable to assume that these 100m patients will have hypertension independen of hypertos administration that their insurer must pay for. Only those yet to develop Hypertension present a potential cost reduction to the insurer through provision of hypertos.
Thank you so much
Yes, I was stuck at the same place. Thanks for posting this.
Thanks for putting it here. I had the same doubt!
why would you multiply the patients that will still get hypertension, considering they take the preventive drug, with the costs of the coverage? The treatment in it self is 10k, which is idenpendent to that same person being taken the drug. so = 100m*10k + 50*5k + 0,2*50m*10k=
FDA stands for Food and Drug Administration, not "Federal Drug Administration" as you state at 00:37
Ofc there’s confusion over the 100m-50m, but I don’t get why covering hypertose saves insurance companies 10k a year, it should save them 5k a year as they are still paying 5k for the preventative drug
You need to reword this. 100m people already have hypertension and you stated that Hypertos does not treat hypertension but prevents it.
In my opinion, the cost that insurers cover both treatment and Hypertos will greater than the cost covered only treatment. It’ll be 100M*10K (the cost of hypertension treatment)+ 50M*5K (high risk people using Hypertos)+ 50M*20%*10K (a certain opportunity that high risk people become hypertension, even though it’s not the current cost , it may be consider a future cost and add to the total cost) = 1350B.
Though it may seems like spending more money than the original hypertension-only one, the true value of the deal is to lower the future hypertension treatment. So, the core question to this case can be transform into evaluating whether the additional 350B expenditure could be cost-effective. The 350B includes the Hypertos used in every 50M people (50M*5K) and the 20% opportunity that the Hypertos treatment failed (50M*20%*10K). So now, we need the information about without Hypertos, how many percentage of people will transform from high risk to hypertension. Given that we don’t have the information, we assume that 80% of people will transform from high risk to hypertension without Hypertos, and we'll find that the cost to be 50M*80%*10K=400B , which means if the incidence that high risk people turn into hypertension is 80% without Hypertos intervention, the introduction of Hypertos will be cost-effective (we use 350B to prevent a possible 400B future expenditure).
And the following question, how to solve the maximum pice of Hypertos treatment. Just as mentioned, the core question is to consider whether it’s cost-effective to prevent high risk people from becoming hypertension. We keep the assumption that without Hypertos, there’ll be 80% of high risk people turn into hypertension. So, we can calculate like 50M*80%*10K (without Hypertos cost) > 50M*20%*10K (Hypertos used, but failed) + 50M*80%*[X]K (Hypertos used, sucessful), and the outcome is [x]
I think that the confusion around this case could be fixed by including the percentage of average risk and high risk patients that will develop hypertension in a given year. Without that data there is ambiguity about the population cohorts to be included in both calculations.
Yep. Agree completely.
yes
There’s another potential perspective here to consider in the amount saved per patient. In the presented calculations, the solution suggests 80% of $10k saved, but this doesn’t take into account the cost of the drug. Also the drug has an 80% chance of saving money but also a 20% chance of costing more money since failed treatment incurs insurance cost of drug administration plus corrective measure to treat the conduction since drug failed. That means you have costs of $10k in the absence of drug but costs of 80%($5k drug) prevented + 20%($5k drug + $10k treatment) not prevented = $8k total expected cost per patient. Thus you are only saving an additional $2k on average per patient subtracting the two outcomes. Therefore the drug can at MOST be an additional $2k per patient or total $7k before the treatment loses its benefit in terms of cost. It seems that the proposed calculation assumes we don’t consider the failed case when looking at total cost because you it only focuses on 80% of the expected outcome.
I had the same thought process as you did as well, however it differs a lil' bit at the 20%. I calculated the expected value : (80%*5k) + (20%*-5k) = 3k. The 80% shows that the drug helped the insurers save 5k (10k, treatment - 5k,cost of drug), while the 20% shows that the company is expected to spend an additional 5k (5k, drug cost + 10k, treatment cost) thus the negative. And overall the expected value is $3k.
I have also used another way to calculate this : from the previous calculation, we found out that the company saves $150B overall, and using this number I divided with 50M (the number of people with high risk), and gives me $3k - which shows the highest margin.
Since this shows the savings they could bring, the final cost of the drug can be increased up to 8k (3k+5k) : but again if they do this, this means the insuerer is not saving any cost at all.
I notice that point as well. I simply calculated the savings by dividing 100/85, which gives 18% marging of savings.
real life mckinsey case.... except rather than hypertensive drugs, how can we get people addicted to opioids?
0:07 this is a full-length case that you can do alone without a case partner.
1:18 how to increase the drug adoption. this company get recent FDA approval on the hypertension drugs. This one is preventative, determined by family history, diet, and lifestyle. The counterpart drugs are taken when people already develop symptoms.
1:40 self-created framework through stakeholders.
patients: raise awareness, create advocates
physicians
insurers: drug is covered by insurers, create advocates
client company capability: remove bottleneck: enough supply, and drug is delivered on-time.
3:23 insurers would cover Hypertos if it saves them money by decreasing the incidence of hypertension in patients, thus decreasing treatment costs.
6:11 這邊不懂...
6:50 if covers Hypertos= $250B+$100B+$500B = $850B. and subtracted with the last slide. $1000B. thus $150B.
7:34 success rate* quantity is expected value.
7:57 Let's think of this in terms of ease of targeting and effectiveness for both patients and physicians.
8:33 a higher bar to convince
9:14 In summary, how should Medicine company focus on increasing drug adoption of Hyptertos?
9:42 Two, we should be able to convince insurers to cover Hypertos if we price the drugs less than $8k. This way, insurers are incentivized to cover Hypertos since it lowers the total cost of treating patients with hypertension.
10:04 For next steps, I'd like to look into two areas. One, determine the best way to market the drugs to physicians. Two, ensure that company can supply enough drug to meet demand.
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Questions:
7:12 How much could medicine company increase Hyperto's price such that insurers would still choose to cover the drug?
7:55 Do you think it will be better to focus on targeting patients or physicians to increase drug adoption?
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0:51 hyper tension = high blood pressure.
3:53 1:3 = 1 in 3
8:08 running television ads
For the maths question is it an assumption that all high risk patients would develop hypertension if left untreated?
Yes! That is an assumption that was made to solve the math problem in this case. In a real case interview, you can clarify any assumptions with the interviewer.
Awesome
I don't see why there are still 50M with hypertension. 50M are at high risk, but those are not in the count of 100M who already have hypertension, why is it 100M hypertension-50M high risk?
Here's another way to think about it:
50M people already have hypertension, so those people will need to be treated regardless of whether Hypertos is given to the remaining population. We can leave this group out in our calculations.
If we don't administer Hypertos, assume the 50M high risk patients will develop hypertension, which costs $10K per patient, or $500B.
If we administer Hypertos, that costs 50M patients * $5K per patient = $250B. We also need to take into account that the drug is only 80% effective, so 20% or 10M patients will still develop hypertension. This is an additional cost of 10M patients * $10K per patient = $100B. The total cost of this option is $250B + $100B = $350B.
Therefore, the savings Hypertos offers insurers is $500B - $350B = $150B.
Hope this helps!
@@HackingtheCaseInterview Your explanation is correct but what the video implies Is that we are subtracting 50 million who is at high risk from 100m who already has it and there's nothing could be done about it.
@@abhishekalva7475 Thanks for your comment. The 50M people will already have hypertension, which is why we subtract them out. Both approaches will actually lead you to the same answer for this case.
@@abhishekalva7475 ahahaha i perfectly understand your point, i think the resolution is wrong
I even confused more. Where does $850b comes from with high risk of 50m, 5k per insurance and 20% of faiure rate?
Just want to add the same comment as someone wrote below. The calculation doesn't make sense. The company would have to treat the 100 million people who already have hypertension regardless of whether you prescribe the medication since it is preventative, not a treatment. Then the math doesn't make sense.
If you already have hypertension, your are not at risk of developing it, you have it. Thus the risk % should be applied to the proportion of the population we know that don't currently have the condition. Therefore, it should be on the 200M remaining.
is it 1 in 3 or 1:3 ? coz 1 in 3 means 1/3 and 1:3 means 1/4
The way the ratios are converted to fraction is incorrect
The first step itself is incorrect, 1:3 means 25% have and 75% don't have and not 1/3 and 2/3. Basic Maths?
that would be 1/ 4
This shit so confusing
literally..
Not helpful at all buddy
McKinsey is a lame company. They reject people on some stupid game quest, a game that misscalculates the time so you can get easily confused. I know and love working cases, but they rejected me. Bad company with bad and unfair selection prosess.