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What’s new in the growing field of global market access?
Despite its underlying importance to the very survival of the R&D industry, market access has not received the attention it deserves as a living, strategic function, with its own embellished litany of shared learnings and “best practices.” One prominent industry practitioner, Ed Schoonveld, currently a managing principal at ZS Associates, has moved to fill that gap with a new, second edition of his 2012 book, The Price of Global Health. In the following Q&A, Pharm Exec Editor-in-Chief William Looney talks to Schoonveld about the key policy and management issues around market access, and what he sees as a necessary effort to take this relatively new set of pharma capabilities to the next level-from theory to practice.
Looney: The second edition of The Price of Global Health was published in January. What in the global pricing environment has changed in the three years since its initial release? Is a comprehensive market access strategy now the norm in bringing a new compound forward to commercialization?
Schoonveld: Yes, market access strategy is now a regular part of the conversation in pharmaceutical company launch strategy. It has become a necessity due to significant changes in the way all payers-public and private-negotiate market access and pricing conditions with individual companies. Examples include the AMNOG legislation in Germany, which ties drug pricing for new medicines to strict requirements around demonstrated benefits; formalized medical/economic value requirements in France; the launch of a vigorous debate on the definition of “value based” pricing in the UK; the fiscal crisis in health systems and the subsequent mandated price cuts, coverage restrictions, and patient contribution increases in Europe’s economically ailing southern tier; and, of course, reforms in the US designed to drive down health costs through integration of the provider and payer roles, aligning spending to outcomes.
The US remains the lodestone of the global medicines market, so the transitions taking place there will carry a disproportionate effect on future industry profitability. Clearly, the 2010 Affordable Care Act is structured to not only provide health insurance to a broader population, but also to generate savings through new, more efficient players like Accountable Care Organizations (ACOs). ACOs are incentivized to monitor drug spending per indication, with the aim of wresting the fat from high-volume prescribing for major chronic conditions. The idea is that any savings can be shared between payers and providers. With the influx of many new high cost biotechnology therapies, we see more interest in professional medical societies like ASCO in setting ground rules on pricing a new drug therapy-the so-called “value algorithm." It follows naturally that physicians are slowly becoming more comfortable in considering cost as a factor in prescribing, particularly as they face more patient complaints over the high cost of medical and drug therapies.
Finally, there is the excitement generated by new drug technologies and the opportunities for treatments tailored to an individual’s specific disease profile. This means that specialty medicines-high cost drugs for small populations-are going to factor more prominently in the market. The onus will be on the specialty innovators to demonstrate value, not simply in terms of a treatment indication, but on the overall health outcome.
Some of these technologies will actually cure a condition rather than slow or arrest the symptoms. How does society address the budget impact of drugs that cure, but at a high up-front cost? In my view, society is heading for a “perfect storm,” between the opportunities driven by better science and the means of paying for them. Much of the burden is going to fall on the patient, through increased out-of-pocket costs per prescription.
Looney: What about the information revolution in healthcare and the growth of advanced data analytics that give payers greater control over pricing negotiations? How is this trend shaping the market access environment?
Schoonveld: Good information is a prerequisite-a must have-for an efficient, value-based health system. I am convinced this trend is beneficial overall, because as a research-driven industry, we live or die on the basis of evidence. Nevertheless, there is a danger that the expectations around evidence will exceed what we can test and measure: by definition, the “real-world” evidence that payers want is impossible to provide at the time a new product is launched. We must be careful that this enthusiasm for real-world data does not end up impeding acceptance of new drug agents in the marketplace. It’s simple: if you insist on a pure, evidence-based algorithm to determine access, then no new drug will qualify. The industry embrace of big data could come back to bite us by fostering the assumption that we can guarantee a product’s value before it is exposed to actual clinical practice.
Looney: How prevalent is the transfer of market access precedents from one region to another? Is Europe driving new approaches to cost control that will ultimately be adopted in the US, or are we seeing the opposite?
Schoonveld: The idea that regulations spread automatically from one region to another is an overstatement of the facts. The US healthcare system, not to mention the culture of medicine and patient care, is different from what exists in Europe; neither region strives to emulate the other. What does exist is a higher level of mutual awareness of what regulators in each region are doing, a trend driven by more and better information. Everyone is acutely aware of trends like comparative effectiveness requirements, or therapeutic reference pricing. But the questions posed will differ and thus so will the answers that national systems enact, in the form of laws and regulation.
Areas where there is alignment tend to occur around procedural definitions at the clinical setting. This includes the way you select an appropriate comparator in a clinical trial, or the promulgation of professional disease guidelines. Industry should be pushing harder for alignment around comparators because when you have common rules across markets, it is easier to manage a clinical trial. Imagine how much more expensive it is to run a clinical trial when France, Italy, or Germany each insist on a different standard comparator within the same protocol.
Looney: Can you point to countries that are currently taking a novel or innovative approach to market access?
Schoonveld: Germany is struggling with its strategy around orphan drugs for rare diseases. The law provides a fairly generous relaxation from price regulation for these drugs, so long as the annual volume cost of supplying them to eligible patients is below €50 million. What is interesting is the level of support for a more liberal philosophy in increasing the level of access for patients with rare diseases. The desire is to address the ethical aspects without ending up with too many drugs qualifying for orphan status.
In a larger context, Germany continues to struggle in making the management of total patient volume exposure a predictable budgeting exercise. The federal AMNOG price control process lacks control over the patient population that qualifies for coverage under a “negotiated” price. The fallback is simply relying on what the drug label says, which is usually very broad language, but this clashes with the strict volume quotas applied by individual sick funds. This perpetuates planning uncertainty around the drug budget cycle. That then becomes an industry problem as well.
What is interesting to me is the evolution of many of the emerging country markets in market access. Many are trying to erect a functioning universal healthcare system from scratch, which means governments are committed to trying new things when it comes to pharmaceutical P&R. China is deregulating pricing for some categories of medicines and it is supporting privately-sponsored funding mechanisms like the alliance between Roche and Allianz on an insurance model to increase patient access to expensive oncology drugs. However, the great majority of patients still pay out of pocket for innovative specialty drugs. In India, you have some interesting multi-branding experiments to segment between markets. In Brazil, the pharmaceutical market is now evenly split between the public Sistemo Unico de Saude (SUS), driven by pure health economics, and the US-style supplementary private insurance market.
Looney: What other factors continue to surprise you about the market access environment?
Schoonveld: A big one is the persistence of European governments in emphasizing price controls to manage the drugs budget. It is thoroughly wrong-headed to put the onus on price. Managing the level of reimbursement exposure is what matters. The prevailing order based on individual country price controls combined with acceptance of third-party parallel trade is nonsensical-akin to explaining something to someone from a different planet. Only the insular academic bureaucracies that manage national health systems in Europe could come up with this kind of inconsistent regime.
No one seems to recognize the contradictions built into almost every dialogue in Europe about reforming access to medicines. You can sit and talk for two years in the UK about institutionalizing “value based pricing” at the same time as other parts of the system are pressing for the removal of patient access programs that address some of the shortcomings of the current system. Or you can launch a dialogue around more support for R&D innovation without ever addressing local price regulation of new drugs that may end up choking off that drive to innovate. Government payers must actively think about and collaborate on reinstating some very simple market mechanisms that drive consumer and industry behavior at its most elemental.
Looney: Your book emphasizes “story development” to convince payers a new medicine will deliver value to patients. How do you do it?
Schoonveld: I make the point that drugmaker communications on value are unfortunately reminiscent of the dossiers that companies submit to regulatory authorities-vast data dumps accompanied by equally prodigious efforts around dozens of power point slides. This is not the way to convince payers to work with you; the mindset is all wrong. Instead, the focus has to be on simple messaging-hooks, really-that link to the individualized interests of the communities you need to convince to adopt and use your drug. The narrative is vitally important. I have seen so many company payer submissions that are organized on the basis of distinct topics, when what you must do is build a compelling story linked to human interest-a story that flows.
Another requirement often neglected is creating awareness about the condition, not just the product. You have to present the product as a solution to an underlying unmet need, which is a challenge because the medical community is resistant to addressing situations that they cannot treat or cure. No physician wants to sow panic in his patients. Thus, the pressure is on the drugmaker to do two things: show that an unmet medical need is actually a problem, and then present a solution that resolves the problem. If you don’t succeed in raising that fundamental issue of awareness, you won’t have a market for your medicine. And it takes years of effort to achieve it. It cannot be accomplished a few months before launch.
Looney: How well is the industry doing in responding to the changes in the market access environment. What can companies do to up their game in achieving maximum access at prices that adequately reflect their investments in innovation?
Schoonveld: The talent, expertise, and organizational capacity are strong. Where the industry falters is the continuing hit it takes on reputation. Drugmakers seem to face more public pressure than the gun and tobacco industries. All three industries market products relevant to health status; one industry heals, the other two kill, yet perceptions fail to reflect that stark discrepancy. Failure to turn that sentiment around gives a free pass to critics who advance simplistic arguments about company profiteering at the expense of the consumer.
Reputation is often misrepresented as just a public relations problem-it is much more than that. Reputation affects this industry’s basic license to operate. It’s one reason why the industry often doesn’t get the support of governments in confronting the theft of IP rights through compulsory licensing, as practiced by India. In my view, the US government needs to make its opposition to anti-IP rules more prominent, or we face this becoming a real constraint on the global competitiveness of US companies in emerging country markets, the source for much of the industry’s future growth.
Value creation is the best argument drug companies can make. The problem is how the industry engages on this front: the focus is on weighty technical dossiers rather than clear messages tailored toward the stakeholders that count. Those stakeholders are increasingly diverse and differ on the basis of therapeutic segment as well as geography. Getting to the right people with the proper message is more difficult than it appears. It’s all about humanizing what we do.
Looney: Are you saying that evidence is a secondary factor in the proposition around value?
Schoonveld: No. Duality is at the heart of any compelling case for value. You have to make sure you craft a great, audience-appropriate story, and then back it up with solid evidence. Market access people must be acutely sensitive to where the weak spots are in each area of medical practice. For example, in oncology, precedents like the new ASCO value algorithm demonstrate that a new drug offering little or modest differentiation against current therapy is not going to be taken up if its pricing fails to reflect that. Pricing also has to be in line with the position of a therapy within the growing number of clinical practice guidelines; individual physician choice is less and less relevant to what products get used.
Looney: Co-pay offset coupons that companies provide to maintain patients on branded medicines have emerged as a hot topic of debate with payers. How do you see this debate playing out here in the US? /p>
Schoonveld: The industry has made extensive use of these programs to reduce co-pays and thus eliminate disadvantages associated with an unfavorable formulary tier placement. Their effectiveness has made some drug companies more comfortable with accepting an unfavorable tier, using the coupons to level the playing field against competitors with a lower co-payment. Companies must realize, however, that the market is changing: in competitive therapy classes, outright exclusions from PBM coverage are becoming common. Exclusion lists give plans significant negotiation leverage, provided that the physician community accepts a more limited set of prescribing options. Other healthcare plans are making more extensive use of step edits and prior authorizations to guide the “appropriate use” of drugs, which also effectively blocks co-pay offset programs for their covered patients.
Hence, it is critical that companies prepare for a world where these coupons will be much less effective in preserving share of script. The implication is companies must focus on that robust value proposition aimed at payers, physicians, and patients, rather than relying on the coupon as a fallback. Given the current wave of physician objections over high retail drug prices and the incorporation of cost considerations-the “financial toxicity” proviso-in clinical treatment guidelines, intensive outreach efforts will be required to align the medical community behind favorable inclusion of new treatments in these guidelines and on progressively more restrictive payer formularies.
Looney: Looking three to five years ahead, how do you see the market access environment for drug innovation shaping up?
Schoonveld: The biggest change is the requirements around evidence-these are going to be both more numerous and more complex. Payers will continue to develop precise methods to limit a drug’s authorized use to that population most likely to experience a positive clinical outcome. That will tend to narrow the size of the potential market, so companies will be compelled to shape the process in a way that enhances the potential for additional indications beyond launch.
Payers are not comfortable with implementing precision medicine protocols alone, which is why the intervention of clinical practice organizations like ASCO will escalate. The medical profession is now a more direct part of the market access dynamic-there is no going back.
Looney: What about the activities of PBMs to extend the reach of restrictive or closed formularies for their covered patient populations? Will this prove to be the norm three years from now?
Schoonveld: We have to examine this trend closely, to see if the exclusion of some therapies is accepted by the medical community and employers who rely on PBMs to manage their drug cost exposure. Indications suggest the number of covered patients actually affected by the exclusions is currently quite small: what is the share of the plans the PBMs are managing that fall under these restrictions? PBMs don’t wish to find themselves defending a decision to rely on only one covered drug per indication because they know the medical profession finds this incompatible with their ability to make the best clinical judgment for patients.
We will see a lot of give and take around this point rather than the alternative of “one size fits all” solutions imposed by the PBMs. The politics of medical practice can trump their increasing market power, and more people are aware that PBMs have a narrow, expense-driven, short-term orientation that takes no account of the medical cost savings that new drugs achieve from a health outcomes perspective. Looking ahead, the industry has to be more public and aggressive in bolstering that fact, with messaging backed by evidence.
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