5 Challenges Influencing Market Access for Specialty Biologics

Specialty biologics are the fastest growing class of bio/pharmaceutical products, and not without reason. They often offer effective treatment for hitherto untreatable diseases in oncology, inflammation, CNS and endocrinology. However, the runaway prices of such products raise a raft of challenges to ensuring that those in need of treatment have adequate access. This article outlines five challenges that need to be addressed by commercial strategists at bio/pharmaceutical firms for the promise of specialty biologics to trickle down to the widest possible patient population.

Background On Specialty Drugs

Because they represent chronic, ongoing treatment essential for disease control, specialty drugs denote chances to target hitherto untreatable or partially controllable chronic diseases with the promise of biotechnology while ensuring substantial financial return—partly due to their price and also because they represent chronic, ongoing treatment essential for disease control. At present, four out of every 10 drugs in the pipeline of bio/pharmaceutical manufacturers are specialty drugs. Like other modern era disruptive technologies, specialty medications raise radical, continually evolving challenges in their markets.

1. Rising Control & Cost Share for Access

Trends in rising prices for specialty drugs have resulted in rising controls placed on their use by insurers. At present, over 95% of patients diagnosed with any of the seven most prevalent cancers, for example, are subject to some form of control placing restrictions on access. While some of the controls seek to be consistent with definitions of appropriate use and aim to minimize waste, shifting the rising cost of medication use to patients is becoming common. In a recent survey of commercial payers in the U.S., two thirds of the sample reported using patient cost sharing as a tool to manage cancer drug costs.

Relying on manufacturer-sponsored cancer patient assistance programs or other forms of co-pay assistance to absorb rising patient cost burdens will not be the panacea it is thought to be. A recent survey of U.S. cancer treating clinics indicated that less than one in three cancer patients was able to pay the full out of pocket co-pays for a cancer drug; one in four cancer patients was eligible to receive some form of manufacture assistance to fulfill their co-pay obligations, and even of those who were eligible, four in 10 did not receive the assistance they expected. Ensuring equitable market access to promising specialty treatments is a challenge that is only going to become more formidable than ever in the years to come.

2. Site of Care Consolidation

Patient access to specialty biologics in the U.S. today is also acutely dependent on significant trends likely to determine where specialty care is made available. The economics of specialty care provision is fast influencing a wave of consolidation wherein small, stand-alone community clinics are increasingly acquired by large hospitals or impelled to join integrated delivery networks and accountable care organizations. One reason: Tightening reimbursement rules of public and private insurers that intend to limit profit margins associated with the acquisition and administration of specialty biologics.

The advent of accountable care has also raised the bar on patient care in the community even in the midst of daunting financial circumstances. The requirement to meet pre-defined care quality measures has to be balanced against the need to control costs and maintain an ability to make a reasonable profit, an equation that often fails the test of economic reason. It is no surprise then to see a gradual migration of specialty care from stand-alone community clinics to larger, consolidated sites of care.

Oncology clinics that continue to survive consolidation are increasingly sending cancer patients to such hospitals, mindful of the adverse financial impact of treating them on-site. Increasingly, cancer patients have little choice but to travel longer distances, incur more costs and receive treatment in large, impersonal hospital outpatient centers. The costs to payers when patients are treated in the hospital are also higher.

3. Need for Risk Sharing

The specter of spiraling drug costs—particularly for innovative, first-in-class specialty biologics—coupled with limited knowledge about long-term effectiveness outside the realm of controlled clinical trials has raised the level of uncertainty among payers as to their value. As never before, insurers are feeling the pressure to optimize the management of high medical costs and utilization, subject to inadequate understanding of their true value. A tangible risk exists in making available costly specialty biologics with no proven record of effectiveness and safety outside of a manufacturer-designed clinical trial conducted in a controlled setting with pre-selected types of patients.

A consequent trend of critical importance to payers and manufacturers is then thinking of ways that balance paying for costly specialty biologics with rising demands for their access, subject to expectations of sustained, positive real-world outcomes that will enable the full realization of the value inherent in them. Such risk sharing is likely to involve clinical and financial metrics designed to measure product safety and effectiveness in comparison to resource spend and utilization.

4. Mandated Use of Companion Diagnostics

The desire to mitigate undue risks due to inappropriate utilization of expensive biologics also spurs insurer policies mandating use of companion diagnostics as a necessary condition for market access and reimbursement. The drive to include companion diagnostic testing within the purview of the process for ensuring market access, however, requires overcoming a number of challenges.

  • First, there is a paucity of reliable information to establish costs savings associated with the use of companion diagnostics. Clearly, such linkages are likely to be idiosyncratic to a test, the disease and patient state under consideration or, in some cases, the site of care and related administrative processes in use.
  • Second, physicians are not readily incentivized to use companion diagnostics and reduce the number of infusions or injectables administered as a result of negative test outcomes. Fewer infusions or office-administered injectables mean less income and reduced profits. In some cases, administering a companion diagnostic test is not easy. Patients must be tested in a lab setting external to the treating physician’s clinic, requiring separate appointments and costs not always covered by insurance. In some instances, the complexity of the diagnostic testing is such that physician clinics have to send patient cultures to an external lab, requiring additional costs and time commitments.
  • Third, pharmaceutical/biotechnology firms with products tied to mandated companion diagnostic testing can see a reduction in the potential patient population receiving them. Smaller addressable patient sizes imply relatively smaller revenues and fewer repeat administrations over a chronic patient’s life.
  • Fourth, compared to specialty biologics, companion diagnostic development is not an attractive business proposition. Most current companion diagnostic tests are not protected by patents. Tests developed by laboratories do not require FDA approval, nor are they regulated by the FDA.

5. Dealing With the Promise of Orals

Across large and growing disease states such as HIV, Hepatitis C, Multiple Sclerosis, Pulmonary Hypertension, Rheumatoid Arthritis, IBD, Crohn’s, Psoriasis and multiple types of cancers, drugs in oral formulations are set to launch and compete with standards of care defined by infusible and injectable products administered in hospitals or clinics. In oncology alone, more than 25% of compounds in development will be delivered orally.

High-priced orals entail stricter utilization management than office-administered injectable or infusible products. Ensuring that an oral product is appropriately dispensed via mechanisms such as prior authorization comes at an uncompensated cost to the physician’s office compared to the situation in which reimbursement for office-administered medical products is available under the medical benefit.

Based on research with physicians’ offices dealing with oral specialty products, a related concern seems to be a lack of standardization (e.g., consistent paperwork) involving prescribing, coverage and utilization of orals. In addition, obtaining clearance can cause time delays as to when the patient can actually pick up (or receive an oral in the mail) from the pharmacy. Further, some physicians have reservations about the lack of vital hands-on control and interpersonal communication otherwise available when patients receive drugs in the office.

Such concerns, coupled with the obvious lack of profits in prescribing orals compared to reimbursable in-office specialty products, can impede rapid physician uptake of orals and adversely impact their wide availability to deserving patients. An equally serious concern is the risk of significant cost sharing incurred by patients for purchasing oral specialty products, entailing co-insurance amounts typically running from 18% to 30% of list prices. As a result, this sometimes leads to a higher than expected economic burden, reduced adherence and poor outcomes.

Otherwise manageable side effects in the hands of physicians and support staff cause needless treatment abandonment when patients are left to use orals on their own. This places extra onus on manufacturers, insurers and specialty pharmacies supplying oral products to devise ways that ensure uninterrupted use and adherence through costly education programs and tight control on product supply. With the increasing advent of oral products in a wide range of indications, the burden on such stakeholders to fine tune the oral product distribution, access and support infrastructure will increase considerably.

Other Challenges Ahead

Among a raft of other challenges, the advent of lower-priced biosimilars will force branded biologic manufacturers to rethink pricing, contracting and other market access strategies. Significant investments would need to be made in conducting retrospective studies that mine valuable in-market data for deep insights about the cost-effectiveness of their brands. Such evidence would provide some of the rationale necessary to assure access in a payer space in which brand exclusion, step edits and higher patient cost sharing will become the norm. The extent of such challenges will only increase with potential legislation that aims to force auto-substitution of a biologic brand with one or more of its biosimilars.

The views expressed herein are the views and opinions of the author and do not reflect or represent the views of Charles River Associates or any of the organizations with which the author is affiliated.

  • Sanjay Rao

    Sanjay K. Rao, PhD is Vice President in the Life Sciences practice at CRA International. Since 1990, Sanjay’s projects have impacted product and portfolio development strategy, clinical trial investments, pharmaceutical brand development, new product commercialization, clinical and geographic market development, sales force design and optimization, product lifecycle management, and new product and portfolio pricing, access and evolution strategies. Sanjay is regarded as one of the leading strategy consultants in the global bio/pharmaceutical industry.


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