By 2013, specialty drugs will account for half of all pharmaceutical spending…and most of the industry’s growth. These complex, large-molecule products, though, demand sales and marketing approaches aimed at demonstrating positive outcomes.
Products serving patients treated by specialists are a bright spot in the modern biopharmaceutical landscape.1 They promise substantial benefits in previously under-treated categories like cancer, arthritis, Alzheimer’s disease and multiple sclerosis. Utilization rates are rising more than twice as fast as general pharmaceuticals’, and by 2013, specialty drugs will account for half of all pharmaceutical spending. It is estimated that approximately 30-40% of drugs in pharmaceutical drug pipelines are likely to be specialty drugs—with almost a quarter of these meant to treat orphan conditions. And by 2014, seven out of the ten drugs with the highest revenue in the U.S. will be specialty drugs.2
This boom has, however, raised critical issues on topics ranging from clinical development and regulatory preparation through pricing, market access, marketing and sales-force structure.
The specialty care business is fraught with significant challenges, some of which arise from the nature of the products themselves. They are based on large molecules or complex molecular combinations often unsuited to solid oral dosing, and often require injections or infusions. This, in turn, opens the door to a raft of development and commercial challenges. Clinical trials to determine optimal pharmacodynamics, clinical properties and proof paradigms are longer, more complex in design, and more expensive. Safety and efficacy conclusions are less open to generalization, and more subject to differences in individual genetics.
The true burden of proof for a novel specialty medication only partially depends on results from company-sponsored clinical trials. It often expands to include demands for outcomes data in a real-world setting. Development timelines for novel specialty products can stretch into decades, contributing to sunk costs that cannot be recovered except through higher prices. It is no secret that inline specialty-care products carry very high price tags, even in a marketplace where pharmaceutical products are generally perceived to be expensive. For example, specialty biologic treatments for cancer or rare, life-threatening diseases cost anywhere from $50,000 to $400,000 per year, far in excess of what their target patients can afford.
The unique characteristics of specialty products are a challenge even to those insurers who take on the task of providing their clients with specialty drugs. Tough decisions on allocating resources to expensive specialty drugs spur vigorous debates about the value of available evidence. In the absence of comparative, real-world outcomes data to bolster coverage decisions, insurers tend to focus on controlling utilization as the preferred means of balancing costs with expected benefits. These debates will continue until substantive outcomes-based data is available. Until then, there is little consensus on what is an appropriate model for balancing the enormous promise of specialty products with the costs of insuring plan members—in addition to coping with more complex supply conditions to ensure proper storage, delivery and ongoing patient compliance with relatively complex modes of drug administration.3
It is not surprising, then, to see developmental, commercial, insurance and distribution challenges seemingly conspire to deny patients the enormous promise of specialty drugs. Specialty-treatment compliance rates are lower than those for primary care pharmaceuticals. Even patients with some form of health insurance are less likely to start on more expensive specialty medications, and they are less likely to continue on them once they start. Many studies show that non-adherent chronic-disease patients have higher risks of complications, hospitalizations and ER visits; they exhibit worse outcomes and incur higher condition- related costs than adherent patients.4 In other words, the very population of patients meant to be served by novel, specialty treatments is deprived of their promise, while society is burdened with undesirable economic consequences.
How can biopharmaceutical manufacturers and marketers mitigate these risks and increase the ability of their offerings to serve intended markets? More effective strategizing is the key. Based on experience shaping the development, commercialization, launching and life-cycle management of several specialty products over the past two decades, here are some suggestions:
1. Design studies that meet the rising demand for outcomes data, preferably in a head to head context.
The clinical program must be integrated, spanning pre- and post-launch time-frames. The need has never been more acute. In the prelaunch phase, conduct multiple-armed trials powered to test variations against existing standards of treatment, dosage, patient populations and geographies. Stratify and randomize studies to reflect the real world; this will go a long way in generating clinical data that can be relied upon as a matter of course in day-to-day clinical practice. In building the pre-launch clinical trial program, carefully consider the type of results that can be generated by a structured patient and/or prescriber registry and a program of claims-based analyses after launch, when sales and marketing efforts are underway. Consider, too, what may be required for approval versus what may be necessary for wide availability and adoption. This is well worth the effort.
2. Expand the notion of proof for approval and adoption to include data on clinical effectiveness, quality of life, cost effectiveness and budgetary impact.
The ubiquitous debate about the true worth of high-priced biopharmaceuticals has brought into sharp focus the demarcation between the approval and the kind of evidence that enables wide access to them. Even when supported on formularies, expensive specialty products are subject to strict management controls that regulate use and require patients to assume a relatively higher burden of the cost. Demonstrated clinical effectiveness (in a wide variety of diagnosed patients) and cost effectiveness (shown by, for example, quantifiable increases in quality-adjusted life years) are the keys to wide access. It is no longer a stretch to recommend that a smart biologic pricing strategy incorporate analyses which explore the impact of a range of prices on specific cost effectiveness measures, so that approved products are launched at a price which can assure wider access and faster market penetration.
3. Craft customized specialty product value propositions for multiple customer segments well ahead of launch. The relative complexity of specialty products can breed divergent perceptions of their true value to intended customers. Disparate customer segments (patients, physicians, payers, hospitals, governments, large purchasing organizations) and sites of care further complicate value assessments. Proper clinical-value assessment is a necessary precursor to product trial. Specialty marketers should develop value propositions customized to the expectations of distinct customer segments. Rather than aiming to build or change perceptions, effective propositions strive to align themselves early with clinical trial designs under the rubric of an overarching pre-launch positioning strategy. This serves as a beacon for impactful trials, producing data that support evolving customer-specific value propositions.
4. Invest in product distribution channels that specifically optimize specialty product adoption and related operational efficiencies.
All evidence indicates a crying need for channels of distribution that are fine-tuned to the unique characteristics of specialty products. Failing that, fundamental inefficiencies in the current distribution model—designed for pills— will continue to generate unnecessary costs, providing every stakeholder in the supply chain little option but to raise its price. For example, considerable evidence 5 suggests that the buy & bill model for administering biologics leads to excessive utilization, waste and reimbursement. Routing biologics to the specialist through specialty pharmacies—specifically geared to handle purchase, storage, insurance, reimbursement, supply and maintenance requirements of biologics— would eliminate such inefficiencies. Manufacturers would be able to develop preferred vendor relationships with specialty pharmacies, generating savings which could be passed on to payers and patients. In parallel, changing patient insurance structure to cover a biologic under the pharmacy benefit (rather than a medical benefit) would lead to more transparency in recording costs and dose-utilization patterns,6 distinct from costs of product administration and office visits. This would also enable manufacturers to better control access through, among other means, attractive payer-specific contracting.
5. Emphasize the critical importance of ensuring patient adherence in drug development, commercialization and in-market management.
High out-of-pocket costs reduce trial and adherence to specialty product treatment regimens. What is less known is the relatively high impact lack of adherence can have on specialty product revenues, given their high unit costs and limited target patient populations. With the imminent increase in the availability of specialty products (cancer vaccines and therapies for orphan diseases, for example) non-adherence will become even more of an issue. One important means to improving adherence is to re-envision reimbursement systems and benefit designs for specialty products so that administration and compliance are facilitated. In parallel, technological improvements in drug delivery and absorption methods make for easier administration, facilitating patient convenience and affordability. 7 Offering patient copayment assistance (direct or indirect) is an obvious, even necessary, step; but hardly the panacea to solve the burgeoning problem.
6. Emphasize payer targeting and relationship development.
As more patients obtain insurance, and more specialty products (biologics, specialty vaccines or chemical entities) vie for payer support in a highly competitive marketplace, it is increasingly difficult for manufacturers to develop strong working relationships with payers. In a heterogeneous, multi-payer market like the U.S., this is all the more challenging. In lieu of highly customized relationships with distinct segments of payers (that may differ on the basis of geography, patient profile, provider network structure, preferred approaches to controlling utilization and financial goals, for example), setting prices for inherently expensive specialty products can become a dicey exercise at best, with the manufacturer attempting to unilaterally maximize its perceived gain. Understanding the full spectrum of specific payer needs, motivations and expectations can also help jump start advance contracting negotiations to maximize product access. The Key Account Management (KAM) Model8 to customize payer marketing and relationship development is fast gaining ground. When implemented with specific, custom goals—and in tandem with all concerned stakeholders such as key payer accounts, providers, hospitals, academia and government agencies—KAM models can lead to significantly better access, better perceptions, strong stakeholder satisfaction and significant profits.
7. Adapt existing sales-force models to fit the specific demands of specialty products.
The traditional share-of-voice, face-to-face, physician-focused, sales-rep model is not suited to selling complex specialty products. 9 Physician offices do not represent the most important points-of-purchase decisions. Larger customers such as public and private payers, government agencies, specialty pharmacies, hospitals or group-purchasing-organizations are customers with higher leverage, requiring a distinctly different sales process. Specialists in general are gravitating toward online avenues for obtaining clinical information, on-demand samples, promotional materials and product support. When a personal sales pitch is called for, the nature of the specialist- rep interaction demands diverse skill sets, calling for in-depth scientific knowledge, the ability to discuss elements of a contract, and the readiness to facilitate customized dialogue through virtual means.
1. The URAC Specialty Pharmacy Standards defines specialty drugs as drugs or pharmaceuticals that usually require special handling and administration, unique inventory management, a high level of patient monitoring, and more intense support than conventional therapies. Specialty Pharmacy Accreditation, 2009. www.urac.org
2. Healthcare Trends in America-A Reference Guide, BCBSA, 2009; INSIGHTS 2010, CVS Caremark, Evolving Pharmacy Care, © 2010 by CVS Caremark. Medco Drug Trends Report 2009
3. Pricing Biologics–Issues, strategic Priorities and a Conceptual Model; Rao, Sanjay K., Journal of Commercial Biotechnology, v17, Q1, 7-23, 2011
4. Evolving Pharmacy Care For Improved Outcomes & Lower Costs, pp 26, INSIGHTS, Evolving Pharmacy Care, CVS Caremark, INSIGHTS 2010
5. The Arrival of ASP; Mullen, Patrick; Biotechnology Healthcare, June 2007
6. Specialty Drugs–Rich Pipeline That Needs To Be Managed; Bradbury, Keith; Biotechnology Healthcare, Oct/Nov. 2009
7. Rising to The Challenge; Rao, Sanjay K., pp18-21, SCRIP, March 2006; Also available at www.scripmag. com
8. What Payers Want, Viewing Payers As Customers; Heitzman, Linda; Shapurji, Dhan; Poulin, Michelle; Lesser, Neil; Deloitte Life Sciences, Deloitte Development LLC, 2009.
9. Rethinking Commercial Strategy – A Patient-centered Commercial Model; Rao, Sanjay K., Journal of Commercial Biotechnology, v16, 3, 206-223, 2010