Reclassification of these products provides payers with greater control and oversight of their therapies. Previously, payers had no idea how much they spent on specialty products, the result in part of comparatively vague codes. Reclassification, and the use of NDC codes, provides payers with much more accurate data on utilization. In several classes, payers have used this new accuracy to draw conclusions about the cost-efficacy of competing products, with negative consequences for those agents with higher daily average consumption data. For the affected manufacturers, it will be difficult to offset concerns about cost-efficacy without addressing prices.

The research finds broad evidence that patient cost-sharing burdens will rise, with respondents projecting co-pay increases of 15 percent over the next 18 months Currently, 80 percent of the respondents collect co-pays for biologic and specialty therapies, with more than half of those collecting flat fees averaging just under $47. Thirty-six percent of payers report the use of a tiered design for injectables, though that figure is expected to rise. The stated cost-sharing burden for patients is comparable to that for oral therapies, with a third-tier co-pay level of around $40—and most specialty therapies fall in the third tier. Notably, several payers anticipate introducing a fourth tier, with an average co-payment of just over $60, within the next 12-18 months.

The overwhelming majority of payers (92.7 percent, up from 85 percent only six months earlier) believe that attractive pharma discounts on injectables and biologics could result in preferred position on their formularies, raising a new challenge for specialty manufacturers. In the past, companies could concentrate their marketing and sales energy on specialist prescribers, but as more MCOs establish formularies for injectables and biologics, pharma companies must increasingly focus on building a compelling case for their products that health plan decision makers will understand.

In some cases, features that resonate most with prescribers may have an entirely opposite effect with payers. Similarly, meeting an unmet medical need may be insufficient to guarantee favorable coverage, particularly if the condition is not life-threatening, as has been the case in the plaque psoriasis market. Manufacturers that fail to understand this may lead their managed care discussions with their weakest message.

New Paradigm As more specialty products enter the market, managed care's ability to determine a product's success or failure will continue to grow. Pharma companies can no longer simply secure favorable coverage and minimize prior-authorization requirements to gain market share. In the future, they will have to navigate complex cost-sharing, reimbursement, and formulary environments. Although obtaining formal coverage remains a critical first step, manufacturers must now contemplate a variety of additional issues, ranging from rules governing prescribing and use to falling patient demand as cost-sharing requirements rise.

Because different organizations employ different rules, impose different cost-sharing requirements, and reimburse physicians differently, today's market for biologic and injectable products is considerably more complex. Manu-facturers will need to refocus their development strategies or be prepared to negotiate prices in return for favorable discounts. Payers increasingly have the tools and the systems in place to reward innovation—and punish me-toos. Innovative therapies that treat life-threatening and disabling conditions will enjoy broader coverage. Those that treat less serious conditions face much greater scrutiny. Groundbreaking science is no longer enough.