Will Trump’s Blueprint for Lower Drug Prices Change the Price Negotiation Process?

Last month, the Trump administration once again made its desire to lower drug prices for patients clear. Both President Trump and Alex Azar, the Secretary of Health and Human Services, made remarks about how they want to accomplish this and the White House posted a rough blueprint of their plan online. While Trump mentioned “eliminating the middleman”—meaning pharmacy benefit managers (PBMs)—in order to improve negotiations, the blueprint mentions increasing transparency regarding pricing, advancing generics and biosimilars to boost competition, relying more on value-based or outcomes-based payment models similar to the ones used in Medicare and Medicaid, and much more.

PM360 spoke with Lisa B. Bair, the CEO and Founder of Quantuvis, a healthcare IT company that offers a Software-as-a-Service (SaaS) platform for soliciting, tracking, capturing, and evaluating rebate contract negotiations between payers and pharmaceutical manufacturers. We asked Lisa how the administration’s plan might affect pharma, what the administration failed to address in their blueprint, whether PBMs will really see their end under Trump, and how Quantuvis’ technology improves the negotiation process.

Lisa B. Bair, CEO and Founder of Quantuvis

PM360: Based on your experience with drug price negotiations, how do you think President Trump’s blueprint to lower drug prices will affect the industry?

Lisa Bair: I think that the pressure the Trump administration is putting on drug price transparency just means that both parties—the pharma companies and the PBMs—are going to have to be much more informed in the negotiation process. Decades have gone by where this has been a manual process that’s been highly inefficient. Really, these parties lack data that informs the process of the negotiation. Instead, they rely on head count to basically pull together all the data that’s needed to negotiate. So, technology will become more important to drive this transparency and help everybody to manage through this fundamental change that is being driven by the pressures not only from the government, but by consumers to lower the out of pocket costs of the drugs.

When you reviewed the administration’s blueprint, was there anything in there that you think they missed or failed to address in terms of improving the negotiation process?

There are a lot of angles about it that make sense, but what’s always missed in the equation—when people are attempting to place blame—is that what is at the core of this is a traditional and long-held process that is inefficient because it was manual. In any other vertical that you look at, you would never negotiate with the amount of money that’s being transacted in a manual fashion.

What people need to focus on is improving those efficiencies and utilizing technology to make the shift. That in itself provides more transparency in the equation and can result in better deals because they have access to the data and the trends.

I don’t see that the blueprint really talks about those inefficiencies.

PBMs were one of the areas that Trump came down hard on in his speech. He mentioned “eliminating the middleman.” Do you think will we actually see PBMs cut out of the process and more direct negotiations between pharma and insurance companies taking place?

We work with the majority of these PBMs, and I would see that a little bit differently. I think they are looking to be more transparent in the negotiation and really work toward the goal of getting lower copays to consumers. PBMs have an awareness that they need to support what the government is intending to do, which is to make more transparent negotiations and lower costs. From my perspective, that is currently happening because they are using our technology to help achieve those results.

So then, how exactly does your technology help to increase transparency and improve this negotiation process?

Typically, negotiations have been a very manual process that relies a lot on head count, because all of the information is being brought together by emails, Word documents, notes from conversations, etc. There was no standard industry definition around the terms and conditions. So, our technology introduced an industry standard from which to negotiate all of the terms and conditions that happen during the rebate negotiation process. That in itself is a critical step as it gets all of entities involved speaking the same language, so that all of the terms and conditions are much easier to understand because they are defined within the technology solution. Previously, that was missing as everything was being conducted over conversations and email exchanges, which left a lot of room for misinterpretation.

What kind of misunderstandings did this lead to and how has your platform worked to address these?

A lot of misinterpretation occurs, for example, in the price protection language. Imagine one side interpreting the language differently than the other, and then as that starts to escalate, and the contracts are now being executed, one side suddenly realizes the rebate is not actually what they thought. But in our system, the price protection language is defined. The payers put their definition in the system, and then on the pharma side, they must click to say they’ve read that language before anything proceeds. So everything is captured in the system and there can be no “he said, she said” disagreement between the parties.

What other areas of contract negotiation has this platform helped with?

Our customers have really pushed us to evolve the technology to be very clear on what step therapies and utilization management must look like. Again, these are big areas that could be ripe for misinterpretation if everything isn’t made clear. So, the PBMs are basically inputting exactly what the step therapy will look like into the system. And, in some scenarios, the payers will give them the ability to see what the one-of-one, one-of-two exactly looks like, and what the patients must step through before they can be covered for the new medication.

This allows the pharmaceutical companies to be much more accurate, because the PBMs are giving them more information. They can see very clearly what they’re bidding for and what the defined ask is. This also allows them to be more effective in the negotiation process. All the necessary data resides within the bid that’s sent from the PBMs to pharma—it just puts more clarity in the ask. It takes the guessing game out of the equation.

One of the other things the administration has talked about is negotiating more value-based pricing models like some of those used in Medicare Part D. Can your platform help with those kinds of negotiations as well?

It does, but what we set out to achieve first and foremost is creating more of an industry standard, because even basic negotiations and terms and conditions needed to be negotiated in technology. But now, we are looking at ways to expand the technology to accommodate for value-based contracting.

How else have you evolved the platform? Or what changes are you looking to make in the future?

The PBM clients we work with have been transparent in discussions around evolving the technology to further support the business of rebate management, and to that end, this past March we launched a contract management module. In this new module, once the drugs have been negotiated, all of the agreed upon scenarios and all of the specifics around the terms and conditions in those scenarios are basically carried over into the contract management solution as an appendix, so there is no misinterpretation of what they’ve agreed to contract for.

Efficiency starts with the negotiation, but it certainly moves through the whole process of rebate management, and the next logical step is the contracting process. So, we’re looking to carry those efficiencies informed by our customers on to what the next modules look like, to really fill all the gaps that currently exist in the rebate management process.

Finally, with the changes the administration is pushing for and the changes your company is pushing, what do you see for the future of drug price negotiation?

We have been very encouraged by the way that the PBMs are working with the pharma companies to get them comfortable with the technology. It’s the only way to move forward because the manual processes were broken and increased the amount of audits. If both sides continue to look at this as a way in which they both can take advantage of the data that’s being generated in the system year over year, then everybody has an upside to that. I believe our early adopter pharma customers are really starting to tap into the potential of that data and what it’s going to mean in improving efficiencies as we go forward.

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