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Understanding Federal Market Dynamics

The Federal market is best defined as the Federal Agencies that provide direct patient care. The primary Ordering Activities are located at the “Big 4”, which includes the Department of Veteran Affairs (VA), the Department of Defense (DOD), the Public Health Services (PHS) (which includes the Indian Health Services (IHS)), and the Coast Guard. While the Centers for Medicare & Medicaid Services (CMS) is also a Federal Agency, it is truly its own market as its purpose, structure, and function are fundamentally different than other executive agencies.


A few Federal market dynamics that should attract the attention of a manufacturer to this segment include:

  • Patient population – The Federal system includes complex diagnoses in need of unique therapies.

  • Market size – As the 5th largest IDN, there is a bolus of lives requiring care.

  • Innovation – The Federal system, generally, is interested in unique partnering opportunities that go beyond one-time pilot programs.

  • Influence – In 2022, there were approximately 45,000 residents rotating through the Department of Veteran Affairs alone.

Once a manufacturer has a broad understanding of the Federal market and the associated milestones involved with the market optimization process, a Federal market confirmation is the next step to understanding and measuring the specific business opportunity in the Federal market. This exercise starts by measuring the direct business opportunity and considering questions like:

  • What is the size and scope of the patient population?

  • What is the current vs. expected penetration rate?

  • What is the distribution of care between inpatient and outpatient?

  • How does the criteria for use impact utilization?

  • Is the process from prescription issuance to patient delivery frictionless?

The exercise then moves into ancillary considerations in which the indirect business opportunities are explored, such as:

  • What is the potential to influence other markets?

  • How can usage in the Federal market influence overall brand awareness?

  • What is the cross-pollination potential between the Federal market and the commercial market?

The Federal market confirmation feeds the determination if the Federal Market Strategy should be approached as a single market segment, should be further striated into a strategy for VA and DOD, or, rarely, coupled and coordinated into a manufacturer’s existing strategy for other high-control IDNs. Right-sizing the Federal Market Strategy ensures intelligent maximization of the return on investment. If a manufacturer has already made significant investment into this segment, a Federal market confirmation is often helpful due to the dynamic nature of policy change and frequent reorganization of these health systems.


The Federal market provides an incredibly unique opportunity to help advance brand goals and objectives. It requires an approach to access and promotion that is different from other markets, but is worthwhile given long-term access decisions that are in play.

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