PM360 asked experts in market access and working with payers what innovations to expect in this area and the potential impact of a new president in office. Specifically, we had them address one of two questions:
- What innovation do you expect to see within the payer landscape in 2021 and beyond? How will the industry need to adapt to challenges including the digital transformation of healthcare, COVID-19, the introduction of new therapies, etc.?
- What regulations or policies do you anticipate from the Biden administration that will impact drug pricing or market access? Will any of the rules introduced by the Trump administration with the goal of lowering drug prices remain in place?
We expect the line between medical and pharmacy benefits for outpatient drugs will disappear as the U.S. payer system further consolidates into a few powerful, vertically integrated entities. This could make the negotiation process within the U.S. seem similar to that of single-payer systems outside the U.S.
This trend started in the “inflammation” category with biologics—specifically biosimilar infliximab—and continued with supportive cancer care drugs before moving to pharmacy benefit managers (PBMs) extracting additional discounts from commoditized categories. Vertical integration provides information to the payer from therapy commencement through discontinuation. Manufacturer-generated budget impact models are less impactful, which means more objective and real-world data from the manufacturer is required when developing the financial models that inform the net price offering within a market basket.
The manufacturer should model the post-clinical trial environment so that it supports forecast models. The key to bridging data visibility from the perspectives of both the payer and the manufacturer is by incentivizing the patient to provide feedback through digital health mechanisms that reward compliance and persistence, which ultimately drives outcomes, and to develop partnership programs to obtain real-world evidence.
COVID-19 caused U.S. healthcare stakeholders to make many adjustments. ICON Market Access conducted in-depth interviews with 10 U.S. payers to understand the impact of COVID-19 specifically on payers and their interactions with pharma manufacturers.
The majority of payers interviewed expressed a shift in priorities and put COVID-19 related care first. The pandemic has created a greater emphasis on telemedicine, an area of care delivery that is here to stay. Payers further believe that communications with manufacturers have been largely status quo, despite a largely virtual environment.
For manufacturers with upcoming product launches, it’s important to note that payers have not changed their launch needs, requiring manufacturers to further evolve the effectiveness of virtual communications and focus on developing a strong digital presence to support launch efforts. An easily accessible central repository to house relevant resources is one approach to digital communications that is well received by payers and has proven highly effective for manufacturers that have adopted this omnichannel solution.
Omnichannel provides a holistic approach centered on the payer customer that delivers campaigns with measurable success and unified digital tactics which resonate and allow for maximum delivery of product information in the new normal of our virtual environment.
Reimbursement for de novo medical devices is an uphill struggle. In the payers’ war of attrition, denying reimbursement by calling something “investigational” works only for payers—not for physicians or patients. The solution to overcome payer obstacles is for physician groups, trade associations, venture capital funds, and patient advocates to join forces to support digital- and connected-device access. The FDA reviews 510K medical device applications for safety and efficacy; however, even after this regulatory review, payers still have sway over what physicians can prescribe and patients can access.
Unlike one-payer system countries, such as Germany, the U.S. insurance network is fragmented, which adds complexity for medical innovators seeking coverage. In the U.S., each payer sets individual standards for coverage. Health insurance companies can therefore seem deaf to consumer needs when it comes to evaluating new devices and technologies that can address persistent medical concerns. Until the opaque walls thrown up by payers can be torn down, patients and physicians are forced to expend huge amounts of time and energy to get answers.
Innovation is only meaningful when patients have access to it. Consumers—the payer system’s customers—are becoming smarter and more informed every day, and are seeking ways to act, together.
Wow. How do we answer this in 200 words or less? First and foremost, the Biden Administration will be deprioritizing the lower drug executive orders in favor of stabilizing the Affordable Care Act with an overall goal to ensure more people have access to good affordable healthcare.
Once the marketplace is stable and undersinsured and uninsured people have better access, I believe we will see more work around the value associated with prescription drugs. We should expect to see policies ensuring both payers and manufactures share profits to subsidize care, and we will also see policies evolve our healthcare system to pay for more value. The result will hopefully be more payer partnerships, including providers, manufacturers, health plans, pharmacies, hospitals (large systems), and communities.
If the ACA is implemented appropriately, the focus will come off of individual drug cost and look solely at the societal benefits of helping people live healthier and more engaged lives. With all stakeholders set to profit, they will be incented to guide this overarching healthcare principle.
The more ambitious policies from the previous administration, such as allowing direct pricing negotiations between Medicare and manufacturers and Trump-issued executive rules (the “Most Favored Nation” rule that pegs U.S. prices for physician-administered drugs to the lowest price in other developed countries and the rule to eliminate Part D rebates) are unlikely to move quickly given legal challenges and concerns around seniors’ access to medications, out-of-pocket costs, and increased federal spending.
Biden is expected to take a more methodical approach, building on Congressional initiatives. But a few Trump proposals remain a risk:
- Capping out-of-pocket costs for seniors (by shifting some of the cost to the pharma industry)
- Requiring manufacturers to give rebates to Medicare and Medicaid when they raise prices above inflation
- Leveraging CMMI grants and Medicare demonstrations that can be extended without Congressional authority (for example, ICER-style drug assessments)
To prepare, pharma companies can:
- Proactively define key elements of value of medicines
- Showcase efforts to lower patient out-of-pocket costs
- Highlight the importance of pharmaceutical innovation in responding to COVID-19
First, in 2020, CMS proposed a change to Medicaid’s best price (BP) regulation, allowing manufacturers to report multiple best prices for a therapy instead of a single best price if the prices tie to one or more value-based pricing arrangements (https://go.cms.gov/30Sz8b7). Statutory prices were set up to provide a pricing advantage to state, federal, and safety net provider buyers. But now, the BP has been the single biggest deterrent to the adoption of value-based contracting. Ultimately, we believe BP reforms will provide a much-needed stimulus and incentive for manufacturers to start indexing drug pricing to therapeutic performance and patient outcomes.
Second, come 2022, plans in the Part D Payment Modernization Model will be allowed to include on their formulary at least one drug per class instead of the current requirement of two drugs (https://go.cms.gov/3bWGh0w). This will result in narrower formularies in general. Barring a few highly underserved therapy areas without treatment alternatives, most of the currently unmanaged classes will be subject to contracting and negotiations. Higher patient support and reimbursement burden is also very likely because of increased scrutiny and higher branching of formulary designs.