How can pharma companies build market access advantage during early stage development?
The market access environment in the US has become tougher than ever for innovative pharma companies with payers and policy makers increasingly scrutinizing the drug prices and demanding cost-effectiveness data to justify the heavy price tags. Therefore, it is of vital importance for pharma companies to consider market access challenges during early-stages of drug development in order to tackle the anticipated market access related-issues. Here are five key questions that pharma companies need to ask in early stages of drug development:
- Are the R&D teams thinking beyond drug safety and efficacy?
Thinking about market access at early stages of drug development is not ingrained in R&D teams, but it is something that is now more of a necessity. Pharma leaders need to think about ways to influence their R&D teams to conduct research that aid in tackling market access challenges that could surface in the future. Some important things to consider during early-stage drug development include:
- Adopting clinical trial designs that help in conveying drugs’ value story is of prime importance. Selecting the most appropriate study population, incorporating easily measurable clinical outcomes as primary/ secondary endpoints and selecting most effective dosing & administration regime that ensure optimal adherence to therapy need to be considered.
- R&D teams need to determine if the amount invested in drug development is worthwhile - developing a new prescription drug is estimated to cost approximately $2.6 billion according to a recent study by Tufts Center for the Study of Drug Development (published in the Journal of Health Economics). If the products are incapable of surviving competition from other branded drugs or generics, the companies may have to reprioritize their pipeline options. An in-depth understanding of PBM/ payers’ reimbursement strategies will be beneficial (DRG’s PBM profile series, MCO Analyzer).
- Given that the clinical pathways and treatment modalities change very frequently, it is crucial to consider these factors before advancing pipeline drugs to next level.
- Are health economics models in place well before drug launch?
The Health Economics and Outcomes Research (HEOR) teams that play a pivotal role in developing economic models that convey value messages for novel therapies. Traditionally small and mid-sized pharma players have been outsourcing HEOR work and waiting until after phase III trial results before investing in HEOR internally. This later stage approach to HEOR implementation can limit the commercial success of products.
Moreover, as the concept of value-based reimbursement gains more traction in the US healthcare system, pharma manufacturers need to be prepared to demonstrate clinical as well as economic value for their products in comparison to competitor products well before they reach the market. Here are few considerations for HEOR teams:
- Collaborating with R&D teams and generating evidence of drugs’ value during clinical trials is of vital importance. This will help HEOR teams to develop a robust value story that will aid their drug’s market access and commercialization goals.
- In therapy areas where multiple drugs with little clinical differentiation are expected to be launched, it is important to establish comparative cost effectiveness. This step is crucial to gain favorable formulary placement on payer/ PBM formularies.
- With the Institute for Clinical and Economic Review (ICER) gaining considerable attention as a quasi-governmental heath technology assessment body in US, it is important to study disease burden in terms of Quality-adjusted life years (QALYs). If drugs are not clinically differentiated and are priced too high, they could fail to meet ICER’s cost-effectiveness benchmark resulting in rejection by payers as well as government bodies.
- Payers will continue to look for engaging in outcomes-based contracts that tie reimbursement to drug performance. According to DRG’s internal repository, around thirty five value-based contracts have been tied so far between payers and pharma companies. The HEOR teams need to identify the outcomes pertinent to the drug (e.g. reduction in hospitalizations, medication adherence) that are best suited to engage in these deals.
Is the pricing strategy vetted by payers?
Pharma companies are no longer the sole decision makers when it comes to setting list prices; they will have to consider payers’ opinions – private and public - in order to achieve optimal commercial success for their drugs. Points to reflect for pharma pricing teams:
- Conversations with payers in early stages of drug development - as early as phase II - will be crucial to understand the reimbursement strategies adopted by payers. More importantly because the payer space is consolidating with vertical integrations (e.g. Express Scripts with Cigna; Aetna with CVS) and mega mergers (Centene- Wellcare expected to close is first half of 2020).
- The most notable move under the Trump governance to control drug prices will be the launch of the national drug pricing policy expected in 2020. If the policy is successfully rolled out, pharma companies will have to set their list prices more conservatively as the program will promote competition among drug manufacturers, increase transparency with respect to the highly opaque PBM-pharma transactions, and incentivize drug companies that slash list prices leading to lower out-of-pocket expenditure for patients. At state level, over 80 bills targeting list prices, maximum allowable price and net price disclosure are under consideration. In such a scenario, pharma companies will need to adopt more flexible pricing strategies to maximize return on investment.
Are the sales & marketing teams tapping the correct markets? :
The marketing teams need to identify the key payers that they want to target well in advance as negotiations can be a lengthy affair. Other factors to consider include:
- A granular understanding of the regional health plans and state-specific information on market share and other disease management programs (detailed in DRG’s Health Plan Profiles), will help in gaining favorable placement on key plans’ formularies.
- The sales and marketing teams will have to learn to decipher clinical data and complex economic models, as well as develop the skills to negotiate with healthcare payers equipped to conduct sophisticated analyses on cost-effectiveness on their own.
- The provider landscape is transforming with new accountable care models and integrated delivery networks (detailed in DRG’s Healthbase. Sales teams have to decide which institutions would benefit from more visits and which would not.
The traditional way of developing drugs primarily focusing on clinical effectiveness and passing them over to the marketing teams to sell, hoping that the drug will successfully tackle the market access hurdles simply doesn't work anymore. The R&D, HEOR and Sales &Marketing teams need to commit to market access as an intrinsic nature in order to tackle the ever changing reimbursement environment in the US.