Three takeaways from the CBINET Access and Coupon Conference

As faithful readers will already know, this week we sponsored and attended the West Coast Access and Coupon conference. The three biggest takeaways were:

#1) A wide gap still exists between the leaders in the space and those who are new to the area. While this is natural and a part of the landscape, coupons are becoming too big (estimated to be $13B in aggregate spend by 2019) to leave coupons to the newest members of your brand team. Time to set up a Center of Excellence, if you haven’t already done so, and put as much time and attention into creating and monitoring these programs as you do on Managed Care strategy. In fairness, the members of COEs that I do know from Pharma weren’t in attendance – but this is a problem too, because we need opportunities to get together, brainstorm, and collectively address points #2 & #3.

#2) From our perspective, neither Industry nor the Copay Card providers are taking fraud and abuse seriously enough.

Only one panel covered fraud and abuse, and only at the most basic level. The comment was made that performing audits and excluding pharmacies from the network is the job of manufacturers – which seemed strange to us – as profiting, via volume-based contracts, in situations where fraud is either confirmed or highly suspected, would AT A MINIMUM put the commercial interests of the copay vendors in opposition to their pharmaceutical clients.

We, at ChiralLogic, aren’t lawyers and can’t/don’t provide legal or compliance advice. But suffice it to say that our eyebrows were raised. If we were directly managing these programs, we would provide written instruction to our copay card provider to make us aware, in writing, of any pharmacies in their network either confirmed or strongly suspected of fraud – either for our programs or in their network for another company. We’re also working on establishing a real-time fraud detection capability and starting to think about working with ChiralLogic clients on implementation.

We support human and computer driven monitoring looking for suspicious pharmacy activity. For more information on what we’d look for, please contact us directly.

#3) The industry is losing – losing the battle of contracted access, and losing the battle by bearing the brunt of increased patient out-of-pocket

Various sources, from the companies that report their Gross-to-nets, to ESI’s 1.8% price increase, to the performance of most large pharma and biotech stocks suggest that the tide for price increases has changed and the payers and PBMs have won. The coupon industry is stuck doing things the way they’ve always done them – they’re still focused on coupon aggregators (easily fixed by increasing your cap to avoid the ‘copay surprise’) when the payers are counting their rebate dollars (increasing while access is stable and declining).

What’s needed is new and truly innovative thought. That might come in the form of an upstart copay provider. Innovation might come at the expense of the employers – but from what I’m learning employers and PBMs are innovating FASTER than the industry. Retail will, eventually, win the battle and issue their own copay adjustment vehicles (for obvious reasons they probably won’t be ‘cards’ but they’ll act similarly). Vertical integration means MORE copay aggregation as the payers get increased access to even retail transactions.

So even the innovation edge is going to the payers/PBMs. Coupons and copay cards are here to stay until 2023, at the earliest. Let’s work together to turn this around for manufacturers, patients, and providers.

Also published on LinkedIn

In honor of Uwe Reinhardt – the Sahara Model & Why it Matters

Uwe Reinhardt makes a number of brilliant points in this post, published in February of 2017 – thehealthcareblog.com/blog/2017/02/08/the-sahara-model-of-value-pricing/

There’s an incredible amount to unpack in this piece. And it’s one of the closest pieces I’ve seen to how drugs are actually priced in the United States. Understand the power dynamics of a given market and you’re on your way to understanding pharmaceutical pricing.

The comments about the middle class, especially as they pertain to out-of-pocket expenses for drugs are also excellent.

Clearly losing Dr. Reinhardt is a big loss.

But where does all this leave us? It depends – fully implemented the new finance models mentioned toward the end of the article completely dismantle the global pharmaceutical model as we know it today. Is that likely to happen? No. Is it important for more people within the industry to understand and appreciate these proposals? Yes.

Why? Because application of the Sahara model as illustrated by the recent spate of $250,000/year and now even $475,000/treatment drugs is creating a furor that the industry, Bio, and Phrma can’t control. Rather than talk about pharmaceutical pricing, why not implement (voluntary!) caps on sales and market expenses as a percentage of gross revenues? If we don’t get control of the narrative, some of these innovative R&D strategies are likely to be imposed, especially in a political climate that’s becoming more polarized, and could swing wildly in any direction with each coming election.

To be clear, I believe in the current venture-backed small company to big company R&D system. I believe many of the recommended R&D funding strategies would lead to even more horrible outcomes for new drugs. But I have serious concerns that we need our political class to focus on creating a stable healthcare payments system that covers as many Americans as we can, instead of focusing on how to pay for innovation. But if we continue to lose the battle, by making spurious arguments about needing high prices to support R&D, when we’re really supporting Sales & Marketing, then we make our industry vulnerable to wholesale changes that threaten patients and investors even more.

 

 

 

 

A (partial) list of Pricing and Market Access questions to answer before Launch

Last night I got a call from a Regulatory consultant who’s working with a pre-clinical biotech. They need pricing and market access insights before their NDA is approved. The technology is great, the leadership team is experienced, and they want to make sure they ‘get it right’.

Instead of doing a capabilities presentation, I decided to put together the list of pricing and market access questions that EVERY brand team needs to have nailed in advance of launch to be successful. In the spirit of helping the industry in general, I figured I’d share the framework here. Chiral Logic has extensive experience in answering these questions both from the manufacturer’s and consultant’s point of view.

Pricing:

·       What is your likely weighted average net price cut by relevant books of business?

·       What is the optimal WAC price to communicate the value of the product to the market?

·       Are there relevant price versus access tradeoffs for your product? What are competitors likely to do in response to your competitive launch? What will you do to avoid a price war over the life of the asset?

·       Are there other indications, patient types, or clinical attributes that your product will develop over time that may unlock additional value? How do they influence pricing at launch and over the course of the asset’s lifecycle?

·       What are the expected discounts to achieve your market access goals? What are your breaking points – where you’d like to return to senior management for guidance and potentially delay contracting due to margin erosion?

 Market Access

·       What is your plan for the period when the product will be NDC blocked by most payers?

·       What are the likely restrictions on your product if you do minimal contracting?

·       What is the BEST possible market access that you can achieve, whether through extensive payer education, contracting, or both?

·       Are there restrictions including Step Edits, Prior Authorization, or quantity limits (etc.) that dramatically decrease your commercial opportunity? Conversely, are there sets of these restrictions that you can ‘live with’ because >90% of your target market will already have completed them?

·       What kind of payer segmentation can you expect for your product? Is it based on behavioral or perceptional criteria?

 Patient Pay / Out-of-pocket / Couponing

·       Will you employ Relay Health or Coupons or both to keep patient out-of-pocket reasonable?

·       What is your strategy regarding transitioning your coupon program from launch mode into long-term growth stability mode?

·       What are your expected out-of-pocket costs for patients? What will your TARET copay be? What are your maximum contribution limits? Why? (these should be tied to your market access and profitability objectives)

 Answering these questions is the FIRST STEP on the road to generating your payer launch strategy. As I’ve mentioned before, it’s possible to answer these questions via qualitative or quantitative means AND feed your forecast. While the legwork to get these answers doesn’t have to be time consuming and expensive, this probably isn’t an area to skimp. After all, now more than ever, pricing provides critical input into overall product profitability.

So as my dermatologist says, ‘even if you don’t come to me, get checked out’. Invest to answer these questions – your stakeholders deserve the answers and your commercial partners (including payers) will expect that you know the answers and have a plan.

We’re happy to help you work through these questions as you prepare for launch. For more information – www.chirallogic.com or josh@chirallogic.com

Image credit: Maina Kiai – https://www.flickr.com/photos/mainakiai/
Used via Creative Commons License image used without any modification https://creativecommons.org/licenses/by/2.0/

 

Ask the Expert: The Difference between Qualitative and Quantitative U.S. Payer Research – with Use Cases

One of the biggest sources of confusion with my clients is whether to do small N or larger N qualitative payer research versus adding in Quantitative research. While the needs of each organization are different, here is my take.

Qualitative Payer Research:

One thing to keep in mind in any United States payer study is that the clear majority of lives in the U.S. are at least influence by the ‘Big Three’ PBMs. Estimates vary, but it’s clear that >80% of lives are covered by the biggest PBMs. Thus, I’ve made the argument that increasing the number of respondents can increase project budget without providing additional incremental insights. This is a little different if you find yourself with significant behavioral or attitudinal segmentation. But as I’ll demonstrate below, qualitative methods aren’t as good as Quantitative studies for market segmentation anyway.

So, what’s the right number of respondents? I consider the specifics company confidential to Chiral Logic – and I have a surprisingly high number of readers of my blog from competitors (thanks guys!) – but the basics are, if you can get 50% of lives for an early stage asset (and that’s all the money you have for a study…) you MIGHT be alright. Following the bouncing ball – you can get a ton of marketing insights, especially if response is homogeneous, from 10-12 conversations. The trick is you need the RIGHT Payers. It helps if your moderator has years of experience and isn’t intimidated to push back.

Large N (25-30 respondents) projects are often requested by pharma companies who want to go the extra mile. And, if your guide is too long to get through in an hour, or if you expect heterogenous responses, this might make sense. We moderators hate these studies though – it’s very difficult to stay excited about a project after the 25th HOUR of asking the same questions to different payers. Beyond that, you’re retreading the same path, repeatedly…

 

Quantitative Payer Research:

Quant is great for market segmentation. It’s ESSENTIAL to translate your qual research into the forecast and your qual was reported by respondent. (Chiral Logic doesn’t report our findings by respondent, instead using a methodology that can be directly tied to forecasting). Unfortunately, quant is expensive, requires longer timelines, requires a different skillset & partners, and can return the same insights that were found in qual.

 

Typical Use Cases:

Development assets typically need a small N assessment to get a developing picture of the competitive landscape, likely restrictions both at launch and at maturity, net pricing, and what kinds of value substantiating programs will maximize access.

Before launch (using either information from FDA submission or expected equivalents), I like to complete a comprehensive payer qual study. This study should be sufficiently powered to uncover attitudinal and behavioral segmentation. One of the benefits of the Chiral Logic approach is that we can scale the study, while it’s happening, to generate the insights required.

Then, in cases where forecasting requires, a follow-on quant study can fill in the gaps and eliminate any strategic discrepancies. Also, there are some launches that are so important to the company’s future that no stone should be left unturned…and in these cases a qual/quant methodology can be optimal.

There’s always the problem of getting a ‘normal’ distribution of U.S. payers (something that we’ve been thinking about for years and have a reasonable work-around). But this, I’ll leave for another blog. As my thoughts on the inherent dangers of these developing on-line platforms where marketers can communicate ‘directly with payers…’

WH Proposed Rule on Birth Control – Instant Take = ‘meh’

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Just saw this Vox News article – https://www.vox.com/policy-and-politics/2017/10/6/16435382/trump-birth-control-mandate

And while this is a real bummer, it’s unlikely to dramatically move the market – here’s why.

On the one hand, REQUIRING employers to cover birth control allowed WAC and net price increases for these products. This was because many payers and employers were fearful of implementing ‘too much’ control in one of women’s eight preventive health benefit markets. This pretty clearly distorted the market, if one is solely focused on pricing dynamics.

On the other hand, insurers, payers, employers, and most importantly WOMEN really like this benefit. And, looked at from any perspective, birth control is a very cost effective way to manage BOTH health and non-healthcare resources. (yeah, I’m going with the Nixon reference here, just to point out how far we’ve come, baby!)

In fact, women who have the ability to delay their families make more money. There are too many cultural dynamics to detail here, and I don’t want to digress too much.

But, fortunately or unfortunately, like many of this White House’s initiatives, this is unlikely to do much at all. As noted in the article, it’s possible that large, religious universities MAY take this as an opportunity to stop covering birth control. But remember that women in those institutions are largely of age to revert to their parent’s coverage – until that portion of the ACA is repealed or replaced – and the coverage until 26 facet is HUGELY popular (85% support).

So, while companies MAY restrict coverage of birth control, how many actually WILL change their policies? Over time, I could see a slow change as payers and employers feel more confident about taking action here. But that may end up with even stronger Gx step edits and more limited coverage of brands (if they cover brands at all). Not wholesale failure to cover ANYTHING.

As payers and employers know, TAKING AWAY coverage is much harder than adding it. Women have come to LOVE this benefit. And, politics aside, women will be angry with their insurance providers if they see their coverage change and become more restrictive. Unfortunately, we aren’t rational actors when it comes to aligning our anger with the ultimate decision maker, especially in complex and obscure processes like this. Simple economics would state that they’d seek out plans providing coverage in subsequent years, even if those plans cost slightly more.

This will be interesting to watch develop. I want to voice my opinion that this will be greeted with a giant yawn. Let’s see!