In the wake of the Supreme Court’s ruling on the Affordable Care Act, the pharmaceutical industry faces some interesting challenges in dealing with the law’s effect on Medicare, Medicaid, and pharma’s relationship with patient-advocacy groups.
The recent Supreme Court decision upholding the constitutionality of the Patient Protection and Affordable Care Act (PPACA), also known as ACA, gives the healthcare industry only partial clarity about the path forward. With so many details and nuances in the law, it may feel overwhelming to identify the most important clauses and outcomes impacting the industry. But one thing is clear: Marketers will play a critical role in ensuring their brand strategies are prepared for success in this new environment.
According the Kristie Kuhl, JD, senior vice president at Makovsky Health, the broadest and most immediate impact of the ACA on pharma may come from changes in Medicaid supply and demand.
“With an inﬂux of Medicaid patients expected in 2014, increasingly cash-strapped states, especially those with large populations, will seek to accommodate these new patients on an empty coffer,” says Kuhl. “Look for adjustments to formulary inclusion and reimbursement, and new pricing schemes for pharma to balance. Brands in a more crowded category might face even greater pricing competition and share decline than those with few alternatives.” In addition to the important considerations raised by Kuhl, here is my top three “watch list” for pharma marketers in the wake of the new health care law:
Navigating new “Navigators”: The combination of pathways and affordable insurance exchanges may mean physicians and patients are directed toward a “best practice” approach with some medical deviations allowed. Pharmaceutical and biotech companies may want to engage in communications with the new health insurance exchange “Navigators.” Educating these new, critical players about treatments and evidence-based outcomes, in order to help patients ﬁnd the right insurance plans for their families, may ensure certain drugs are considered ﬁrst. Additionally, it’s important for manufacturers and marketers to recognize a shared priority with patient advocacy groups—continued access to best available treatments—that could play a strong role in providing unbiased information.
Accounting for Accountable Care Organizations (ACOs): The ACA also establishes provisions for ACOs as “shared savings programs” that will help coordinate and promote shared responsibility for the medical care of at least 5,000 Medicare beneﬁciaries over at least three years. ACO providers can include professionals in group practices, networks of individual practices, partnerships or joint ventures between hospitals and professionals, and other entities. ACOs have the potential to help reduce costs and improve patient care, but they also may pose greater legal and ﬁnancial risks to providers. With incentives in place for ACO providers to reduce costs (while meeting speciﬁc quality benchmarks), doctors may seek to prescribe fewer or less expensive drugs.
Following the Biosimilar Pathway: A major element of ACA is the Biologics Price Competition and Innovation Act (BPICA), which established a new regulatory approval pathway for biosimilars. In February 2012, the U.S. Food and Drug Administration (FDA) issued three draft guidance documents to help facilitate biosimilar marketing applications. Yet, many uncertainties remain, including whether and when biosimilars will be approved, the characteristics of the market (i.e., number of entrants and cost of entry), and to what degree biosimilar entry could impact sales for innovator products. This is one to watch carefully, especially as major pharma players seek to enter the category, requiring new marketing strategies be established.
The ACA—and the implementation of its many parts—will inevitably bring a great deal of change. But savvy marketers who keep their eye on these critical elements will be poised to help their companies and brands ride the wave to continued success.