Balancing Pharmaceutical Reimbursement and Market Access With the Right Partner

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Manufacturers must find the right balance in drug pricing, so that medications are appealing to both public and private insurers while still remaining profitable throughout their lifecycle.

In the life of a prescription drug, success hinges on market access—otherwise known as getting paid. One of the biggest challenges pharmaceutical and biotechnology manufacturers face is ensuring they can bring the right treatments to the right patients at the right price.

Image credit: kody_king - stock.adobe.com

Image credit: kody_king - stock.adobe.com

The process of creating market access requires distribution expertise, careful planning, and flawless execution. A sound market access strategy can bring it all into focus.

What is Market Access Strategy?

Market access is a complex process that takes multiple steps and a large allocation of resources to properly navigate. It can take up to $1.5 billion to complete the research and development necessary to bring a new therapy to the market.

As such, you don’t want to die on the steps of reimbursement on your way up the ladder of success. Market access strategy involves generating critical data, ranging from market information and pricing to patient utilization, and communicating these data to the appropriate parties, including both private payers and government programs.

For manufacturers, pricing and reimbursement rates are a vital component of any market access strategy, as they have a profound impact on revenue and, of course, profitability. Manufacturers must find the right balance in pricing, so that drugs are appealing to insurers, both public and private, while still remaining profitable throughout their lifecycle. Arguably, lower drug prices may mean greater adoption by insurers, whereas higher prices may prevent patients from being able to afford and purchase drugs.

Manufacturers can sometimes navigate the process on their own. The largest drug manufacturers typically have in-house teams dedicated entirely to the ins and outs of market access, determining drug pricing and reimbursement. However, most small- and medium-sized drug manufacturers need to work with a partner—generally a knowledgeable consultant or an entity with significant experience—to ensure they have the necessary expertise to create a successful market access strategy.

Market access strategies have major long-term implications too. With a sound strategy in place, manufacturers can ensure successful market access and that patients have rapid, consistent, and sustained access to the life-saving medicine they need.

The Impact of Public and Private Insurance

Manufacturers will be working with different markets, each with its own unique challenges to overcome. The federal market is one of the largest in the industry, covering more than 100 million Americans.

But public insurance is ruled by federal guidelines and it comes with stipulations. Take Medicaid rebate requirements: to introduce a product to the federal market, Medicaid mandates a rebate of 23.1% off the wholesale acquisition cost.

While Medicare and Medicaid services are covered by government health funds, commercial insurance is often distributed through employers and paid for in part, or entirely, by those being covered. Although ensuring that a drug will be covered by public insurance is critical to a drug’s commercial success, tailoring pricing and market access strategy to the needs of your target market (commercial, Medicare, Medicaid, etc.) should be a key priority.

The Complicated Process Behind Drug Prices

Before manufacturers approach insurers, they need to ask themselves the right questions. There are many steps involved in pricing and reimbursement, but strategically engaging payers is a pivotal aspect of successful market access, with questions that include:

  • What is the unmet need?
  • What is the potential for misuse/ inappropriate use?
  • How does it compare to the current “gold standard” (i.e., standard of care) related to efficacy, safety, and cost?

The ever-evolving nature of health care and the pharmaceutical industry can greatly affect a drug manufacturer’s approach to market access, as well. Recent changes to Medicare under federal law include a historic rise in premiums, access to mental health services through telehealth, and more affordable insulin options through prescription drug plans.

Understanding coverage policies, contracting strategies and the nuances of coverage tiers enables manufacturers to understand how to best negotiate drug prices. A proactive approach to market access strategy can ensure these new steps don’t delay go-to-market plans.

The Steps and Benefits of Market Access

A robust market access strategy starts long before the introduction of the product to the market and follows the product’s entire lifecycle. The goal is to create a smooth path to market and ensure long-term financial stability.

Entering the market for the first time can be challenging for midmarket pharma and biotech companies because there is a lot of market preparation work that needs to be done in parallel to clinical development. This is where enlisting an experienced and reputable partner to help with the market access process can be invaluable, because the partner can help the manufacturer connect with the right people and begin to form the necessary relationships with payers and influencers.

1. Meet Key Payers

The first step is to introduce the product to key payers in your market. Through a series of formal meetings, you can help payers understand your business and products.

Be prepared to share a plethora of information, including clinical efficacy, which therapeutic option the new product replaces, and, if possible, what costs this product takes out of the system. In addition, be prepared to discuss the distribution model, the potential number of patients who will benefit from the therapy, and the estimated timing of when the product is coming to market in addition to other key elements of your go-to-market strategy.

The right partner can simplify this process by helping to develop a targeted message while getting in front of the payers necessary to drive market access. Although setting up these meetings can be difficult, the right partner opens doors, helps define a market acceptable message, and facilitates the conversations that are frequently out of reach for the smaller pharma and biotech companies.

2. Define the Burden of Disease

As you meet with payers, you’ll need to analyze the burden of disease for the therapeutic area. Both parties will need to understand the disease state, the challenges faced by patients dealing with the illness, and how the product aims to alleviate these issues.

From a financial impact perspective, your market access strategy should include a thorough review of the average price paid (APP) for comparable medications—and either the savings potential of the new product or the clear clinical benefit, along with specific local guidelines. For example, because Medicaid is administered by the states, the maximum allowable cost for drugs may differ from one state to the next.

3. Introduce the Product

Formally introducing the payer to the final product should include covering FDA studies and approvals, dosage, adverse effects, main applications, distribution model, and promotional strategy. This process has become easier in recent years as the FDA has allowed more open discussions between manufacturers and payers. Ideally, at this point in the process you can move forward without worry, especially if you are opting into the federal market in which limitations are readily apparent and pricing may be steeper, therefore representing more risk for the brand.

4. Define Clinical Advantage

When necessary, your market access partner will put payers in touch with clinical specialists, which can be a critical connection on the route to approval and formulary inclusion, particularly with specialty drugs. The ability to clearly define a clinical advantage can greatly accelerate payer acceptance and speed the process of attaining product coverage.

5. Determine Drug Cost Coverage

The final goal is to determine the lowest out-of-pocket costs for patients and cost to payers. Coverage will also impact how this product will affect the provider and patient experience.

The research conducted will be helpful in this step, as you may already have local and national coverage policies for comparable products from which to draw comparisons. In addition, data around the burden of disease and other important information will be important to support a positive coverage decision.

Drug Pricing Pitfalls

Although these steps may seem straightforward, market access is usually anything but. While the country’s ongoing drug pricing debate keeps drug pricing in the public eye, the industry continues to shift. Ongoing market consolidation has meant fewer companies have more control over prices. Both of these factors make the relationships you build more important than ever.

Manufacturers have plenty of challenges to navigate in the market access journey. Instead of covering more expensive, brand-name prescription drugs, insurers might be looking to partner with pharmaceutical companies that manufacture generic (i.e., biosimilar) drugs, enabling potential lower patient out-of-pocket costs. As such, it is critical to have a strong message that creates a balance between clinical impact, unmet patient needs, and competitive pricing.

A market access strategy will help you avoid these pitfalls by outlining what your product needs to succeed. And with the right partner, you can feel more confident you will have defined a successful strategy.

Navigating a Difficult Road

Pharmaceutical companies have a lot to consider during the lifecycle of a prescription drug: changes to the market, new product uses, new methods to control costs, ongoing competitive threats, limited distribution models, evidence-based pricing, and more—all in addition to considering patient demand and willingness to pay. With these numerous considerations, having a market access consultancy to help determine, support, and communicate the true value of a new prescription drug can increase a company’s chances of financial stability.

Look for a partner who can focus on integrating and understanding the needs of both payers and the manufacturers. Market access experts need to understand the needs of public and private insurers and adapt to market changes along the way.

Given the acceleration of change in the industry, having first-hand recent experience is key to determining effective market access, product positioning, pricing and distribution strategies, as well as enabling the payer relationships you need.

About the Author

Dean Earhardt is CEO D2 Solutions.

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