Alignment Between Manufacturers, Payers Key to Improving Specialty Drug Affordability and Access

As innovation in the pharmaceutical industry has seen disease modifying drugs change the management landscape for chronic conditions, policy solutions to incentivize affordability and access of these novel therapies continue to be burdened by segmented relationships between payers, manufacturers, and policy makers.

Former FDA Commissioner Scott Gottlieb, MD, noted that the opportunity to receive market access earlier in the course of the drug life cycle has influenced some manufacturers to consider concessions on drug price. The increased difficulty to penetrate the market for many drugmakers has led to strategies such as risk sharing.

However, he said that challenges in measuring a drug’s performance in a reasonable period of time has affected some of these models, with it becoming a repetitive type of scheme as opposed to a tailored approach based on the drug, the disease, and the populations served.

“I think what the manufacturer would say to you is that what they feel forced to do is push up the list price, because they know that there's going to be mandatory discounting in public programs like Medicaid, they know that they're going to have to make concessions on rebates to try to buy access to formularies,” Gottlieb explained.

“And so there's this imperative in the marketplace to continue to push up the list price and give room for the mandatory rebating, and if the rebate went away, they can bring that in as price.”

Net prices of prescription drugs have decreased about 1% in each of the last 4 years, whereas list prices have gone up 5% on average.

“List prices need to be addressed—that’s what patients are on the hook for, they’re out-of-pocket or they’re uninsured…We need to find a way to address that issue, making sure we're not tying copays to the list price, but we're tying it to the real price in the marketplace, and finding ways to try to buy down that out-of-pocket cost with rebates at the pharmacy counter.”

Developing proper incentives to encourage affordability and access was addressed by David L. Holmberg, MBA, president and chief executive officer of Highmark Health, who said that there needs to be agreement on what the metrics and expectations should be for novel disease modifying therapies seeking to enter the market.

“We want to figure out how to be more efficient with existing drugs, using biosimilars and generics, whatever it might be, but we haven't even done it with genomics yet. I think there's a whole lot of innovation there,” said Holmberg.

Established drug pricing tools created by entities such as the Institute for Clinical and Economic Review (ICER) and ACI both have their respective policies in determining price, with variables such as quality-adjusted life years and the price of other standard of care options considered.

Although, for transformative drugs, Gottlieb said that the long-term economic cost is of concern for payers who have to continue to cover the treatment of patients who are now living longer through the therapy. Changes in reimbursement and insurance are some of the notable issues that can change the cost of coverage for patients and lead to increased out-of-pocket charges.

This proves particularly true for more costlier biologics whose use is now being expanded to routine care of common conditions, including asthma and high cholesterol.

“The issue isn’t the price increases anymore—the issue is the volumes, the expanding volumes are putting more pressure on the payers. That's in part because the drugs are more effective,” said Gottlieb. “When you think about policy, solutions are unique. You think about segmenting the market, there is a portion of the market that is highly competitive with rebating right now; insulin is an example of that.”

He added that there currently exists 3 segments in the pharmaceutical industry. This includes the highly competitive rebate area, a portion of the specialty drugs market where pharmaceutical companies have monopolies that are not in perpetuity and will expire in a year or 2, and then categories where you have the risk of monopolies in perpetuity.

“If you have a turn of gene therapy come onto the market, once you treat the prevalence population, the incidence population might not be enough to sustain a secondary market innovation.”

Ultimately, one solution will not address the access and affordability issues limiting the specialty drug marketplace. But understanding the area in which novel drugs are entering the market and engaging stakeholders can assist in pursuing that goal.

“We like to do soundbite things, things that feel good, but we don't understand necessarily all the other implications. And we've got to look at things for listening and understand that if you pull a lever over here, there may be consequences in multiple places. And so, at some point, you got to have a summit where we all sit down and say, let's figure this out,” said Holmberg.