The Payer Landscape is Evolving—But Change is Slow

Payers are evolving. Just look at the recent deals that blend together some combination of payers, providers, and PBMs, including mergers between CVS Health and Aetna; UnitedHealth’s Optum and DaVita; and most recently (at least at press time) Cigna and Express Scripts.

“The lines are getting blurrier every day,” says Herman Sanchez, Partner at Trinity Partners. “What is clear: Data remains king. The CVS and Aetna integration speaks volumes about how they will potentially set themselves up as a competitor to the Optum data behemoth. The response from pharma must be the realization that providing real-world evidence (RWE) showing health and cost improvements is going to be paramount to these next-generation players.”

Sean Wagner, MPH and Krishna Patel, PharmD of ICON plc describe these new organizations that are forming as essentially “at-risk providers.” And, according to them, that would require pharma to shift its focus away from promoting features and benefits of individual products to partnering across one or more disease states through population health initiatives.

“Population health typically involves identifying areas of unmet need in the disease state, including screening, diagnosis, treatment selection, adherence, patient- and provider-education, and creating practical programming these organizations can use across providers and patients,” they explain. “The market is ripe for innovative population health initiatives, and at-risk providers are interested if pharma does it right.”

Change is on the Horizon—But Not Here Yet

David J. Melvin, MS, Vice President, Strategy at NaviSync, LLC sees these type of deals as a sign of things to come.

“Although the marketplace has not moved to an integrated payer and provider model overall, such a model will become a key channel if the trend toward vertical integration continues,” Melvin says. “Integration represents a potential boon to pharma companies if products are differentiated and the manufacturer invests in clinical research that demonstrates the differences. By its nature, such integration counters the traditional pharmacy cost-silo mentality, making long-term outcomes and medical cost offsets the most important criteria for decision-making about product access.”

However, don’t expect this shift to overall value to take any attention away from the price of drugs.

“All of these combined entities will still have budgets run largely on annual cycles and will not be reaping all the potential benefits a product may provide,” explains Larry Blandford, EVP, Managing Partner at Precision Xtract. “This will be especially true as the price of complex treatments continues to rise, especially in oncology, as well as with the advent of gene and cell therapies where the full value may not be reaped by the entity that paid for the one-time cost due to the freedom to change plans and providers often.”

The Shift to Value-based Reimbursement

Brendan Gallagher, EVP, Experience Strategy & Innovation at Digitas Health believes the shift to value-based pricing is one of the most aspirational things happening in healthcare, however, the fragmentation of delivery has made this aspiration very difficult to realize. But, change could be on the way.

“At the HIMSS conference in March, interoperability and data standardization were the stars of the show (challenged only by AI and machine learning),” Gallagher says. “In addition, the announcement by Apple to partner with a dozen provider networks to test pulling EHR data into their Health API (and therefore patients’ phones) has led many pharma marketers to give their service design capabilities another look. There is a light at the end of the ‘beyond-the-pill’ service tunnel that will allow pharma to build programs with real outcomes-level data to share with the value-based payments ecosystem.”

For that to happen, pharma will need to greatly increase its role in ensuring outcomes are realized, according to Nadine Leonard, Managing Director, Executive Planning Director at Heartbeat.

“For patient segments where cost is the biggest issue, for example, pharma might consider programs that absorb patient out-of-pocket costs associated with milestone refills (say every sixth month refill),” Leonard offers. “If another segment struggles with co-morbidity issues, a plan that considers the treatment with that unique context could yield superior results. Maybe yet another segment struggles with the ability to get to the pharmacy. Again, a custom solve can be developed. And all of these solutions can be instigated at the point of care via the EHR.”

Defining Value

Of course, the shift to value-based models means that pharma must do a better job of defining actual value.

“Without consensus on the definition of value, pharma may establish novel metrics to support value conversations such as the drug impact on total cost of care as well as connecting drug price with outcomes (survival, toxicity, utilization) in which measures can be reliably and consistently measured,” explains Lori O’Neill, SVP, Director of Market Access and Payer Marketing at Harrison and Star.

To help ensure that value-based models are successful, Leanne Larson, Corporate Vice President and Worldwide Head, Real-World Evidence Strategy, PAREXEL suggests biopharmaceutical companies begin developing a product’s value proposition as early as Phase II and consider the role RWE will play in demonstrating this value, particularly given changes such as the 21st Century Cures Act that will drive the inclusion of RWE in approval and access decisions.

And while Patty Zipfel, Vice President, Scientific Strategy at MicroMass Communications, Inc. agrees about the importance of collecting RWE, she also advises pharma companies not to ignore methods to maximize real-world outcomes early on.

“Complex factors beyond the clinical efficacy and safety of a product—influenced by provider and patient behaviors and perceptions—can impact drug utilization and outcomes in the real world,” Zipfel adds. “For example, the patients’ ability to cope with a condition or method of therapy administration, patient-provider communication, and provider perceptions related to patient identification can impact the use and outcomes of a brand. By addressing real-world factors, pharma can improve outcomes, which will benefit the entire pharma ecosystem.”

And that, at the end of the day, is the goal despite all of the potential changes.

“There are still a number of unanswered questions,” explain Jen Karweit, Senior Principal, U.S. Solution Partner, Pricing and Market Access and Susan Abedi, Senior Principal Consulting Services at IQVIA. “How will UnitedHealth’s recently announced shared rebates affect value-based models? As new innovations such as gene and cell therapy enter the market, will we see new models such as healthcare carve-outs (third-party coordinating care/payments for certain patient groups in return for an annual fixed payment) increase? The answers are unclear but adopting a proactive approach to these types of agreements will allow the pharma industry to foster better payer-pharma relations and, more importantly, better support the patient.”


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