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New technology forces industry to increase urgency.
Over the past decade, the life sciences industry has undergone transformative change that has disrupted everything from early drug discovery to post-launch treatment monitoring. Driven by the proliferation of real-world data (RWD) and technology like AI and machine learning, these innovations are changing our understanding of drug value and enabling life-saving medications to get into the hands of patients faster.
However, changing market dynamics and growing scrutiny around rising healthcare costs have resulted in increased pressure from payers. Today, these critical stakeholders expect life sciences organizations to not only achieve clinical excellence, but to clearly communicate a thorough understanding of the patient population and potential barriers of the market they’re entering. In this new world, pharma can no longer afford to treat commercialization strategy and payer gatekeeping as an afterthought, but they also can’t let the need for these types of additional insights slow them down. Even as demand for hyper-targeted, individualized launch plans increases, timelines have condensed, so speed is of the essence.
To achieve success, life sciences organizations must begin market access activities sooner than ever before and consider how their new treatment will fit into the existing competitive landscape. Understanding how payers manage existing products, what considerations affect coverage decisions, how existing contracting affects physician prescribing patterns and if restrictions like prior authorization or step therapy requirements exist must inform how manufacturers prepare for and enter the marketplace. Achieving these insights at speed requires not only that market data can be accessed quickly, but also that it can be rapidly analyzed to identify relevant trends and information.
Over the past decade or so, payers have shifted their functioning dramatically, becoming even more data-driven in their decision-making and placing increased scrutiny on a drug’s cost-effectiveness and overall clinical value. With the cost of healthcare and drug discovery continuing to rise and value-based contracting gaining traction, demonstrating a product’s economic value compared to existing competitor products is more important than ever. Drugs today need to be reimbursable, not just approvable. This is a trend that we can see playing out in high-profile drug launches over the past few years.
For example, in 2014, the launch of two highly effective drugs for treating Hepatitis C, Sovaldi and Olysio, exemplified this change in payers’ decision-making processes. The treatments were expected to be groundbreaking, causing limited side effects and requiring a shorter treatment duration. However, the high sticker price and large patient population would cost payers billions yearly. As a result, insurers quickly began limiting access to treatment and implementing strict prior authorization policies.
This shift became even clearer more recently, as payers were, and still are, slow to make any firm decision of Biogen’s controversial Alzheimer’s drug, Aduhelm, despite public excitement and long-overdue unmet need for patients with the disease. Insurers aren’t covering the drug en masse, largely because the data isn’t there yet; instead, many are excluding the drug as “investigational and not medically necessary” or have implemented strict prior authorization requirements. CMS has yet to make a final coverage decision and equivocal patient outcomes are concerning payers, leading to an industry-wide shunning of the $56,000 drug.
These two case studies, approximately seven years apart, demonstrate how payer needs and evaluation processes have changed, but pharma manufacturers haven’t fully adapted to the revised expectations.
Payer marketers, account managers, and pharma analytics teams should know exactly what insurers are looking for in terms of cost-effectiveness, clinical efficacy compared to existing products, satisfactory endpoints, and other unique differentiators, long before launch takes place. This type of quick, actionable insight sets realistic expectations, empowers manufacturers to reach payers and providers before competitors, and, crucially, ensures a population will have access to a drug months—instead of years—after launch.
Marrying market access research with robust analysis capabilities can help life sciences companies meet these increasing demands. Ideally no later than Phase III, manufacturers need to understand the landscape of the therapeutic category, recognize which payers or PBMs have existing restrictions or preferred drugs already on formulary, and how many patients are expected to receive approval for the treatment. Previously, gathering this information used to take months of consultant research, one-on-one interviews with payers, and come with exorbitant fees and lengthy timelines. However, when manufacturers gather this information earlier in the process and use technology to more rapidly conduct research, they can build out more effective commercial launch strategies, such as identifying which payers are likely to approve the drug based on prior decisions, or where a large population of patients with unmet need would make coverage an advantageous decision for regional payers. Segmenting payers in this way also allows manufacturers to determine which payers are likely to restrict access, enabling sales teams to start launch access decisions earlier, ideally 12 to 18 months pre-launch.
Especially for drugs launching into an area of high unmet need, it’s crucial to clearly communicate the drug’s mechanism of action and to understand what surrogate endpoints insurers have accepted for other treatments. As novel therapies emerge both for rare diseases or difficult-to-treat diseases, it is falling to manufacturers to anticipate gaps in payer knowledge or awareness of treatment mechanisms and proactively work to educate stakeholders prior to launch. Instead of reacting to payer expectations post-launch, pharma manufacturers need access to a rubric of payer expectations pre-launch to better price, contract and frame their commercialization messaging.
When considering market launch strategy for drugs entering a competitive therapeutic area, manufacturers must also reconcile the cost of their product with accepted therapies already on the market. Payers have different perceptions of a drug’s value, so there isn’t a one-size-fits-all approach to commercialization but understanding how similar drugs have been received can help provide clarity. With this information, manufacturers can even run simulated P&T sessions to test various pricing and contracting scenarios, determine how health plans might evaluate costs, and what level of rebating may be necessary.
Instead of waiting for payer feedback and adjusting commercialization strategies accordingly, pharmaceutical companies can demonstrate a drug’s value to payers early, earning revenue and treating patients soon after launch. This speed gives these companies an edge over competitors, ensuring companies can reach more patients faster and generate revenue right out the door, not years after launch.
Dinesh Kabaleeswaran, Director, Advisory Services, MMIT (Managed Markets Insight & Technology)