Advice For Pharma In 2024: Buckle Up
By Al Jackson
Many pharmaceutical execs will be thrilled to see 2023 draw to a close.
The year began with Sen. Bernie Sanders (I-VT) – perhaps pharma’s loudest critic in Congress – taking the gavel at the Senate Health, Education, Labor, and Pensions (HELP) Committee.
In April, a federal district judge in Texas ruled that the FDA’s approval of mifepristone – one of two drugs frequently used to induce a medication abortion – could be overturned. In December, the Supreme Court announced that it would rule on the availability of mifepristone, a decision that could call into question the validity of every FDA drug approval and disrupt the entire pharmaceutical industry. Such an outcome would be far more disruptive than the prospect of Medicare negotiated prices or drug re-importation ever could or would.
In September, we learned the names – and manufacturers – of the first 10 drugs that will be subject to negotiation for the Medicare population under the Inflation Reduction Act. Those who were named promptly sued to halt the negotiations, in a variety of potentially favorable judicial forums around the country. Manufacturers – and their allies – argue variously that the IRA’s drug provisions violate the U.S. Constitution’s First, Fifth, Eighth and Fourteenth amendments. So far, no court has agreed.
Election Year
Few expect 2024 to be easier for drug companies. Next year will be dominated by the presidential campaign and election. Drug prices and drug companies will receive a great deal of unwanted attention from presumptive nominees President Joe Biden and former President Donald Trump. President Biden’s campaign has made it clear that it will position lowering drug prices as a central argument in favor of his reelection. Former President Trump is on record as seeking to do more to “further reduce the cost of prescription drugs,” presumably by reinstating his “most favored nation” approach.
Trump’s rule would have identified 50 Part B single-source drugs and biologics and tied the Medicare reimbursement price to an average paid by several high-income countries overseas. Pharma companies successfully delayed implementation of the rule in the courts, and the Biden Administration subsequently dropped it in favor of Medicare price negotiation.
But there are other events beyond the Presidential campaign that will impact the drug pricing and access debate going in 2024.
Paying For Innovation
In December, the FDA approved a gene therapy that has the potential to cure patients with sickle cell anemia (the therapy was first approved in Europe). This breakthrough offers hope for an estimated 100,000 Americans living with this debilitating disease, but comes with a complicated administration and significant expense: more than $2 million per patient. This is not the first expensive gene therapy to be approved, but the patient populations for those that are already available are very small. That’s not the case for sickle cell disease in the U.S.
Insurers are not prepared to pay for one-time, expensive cell and gene therapies for larger populations. Because of the already high cost of specialty drugs, insurers are already spending half of their prescription drug dollars on less than one percent of their insured populations.
So, how will insurers absorb this shock? While looking for workarounds – like structured payments over time and pay-for-performance arrangements – payers will have to limit access for patients. When asked why, they’ll point their fingers at pharma companies for pricing these potential cures far too high.
What else will happen in 2024?
Medicare will announce the “maximum fair price” for the first 10 drugs selected for negotiation, on or about September 1, 2024 (about two months before Election Day). Look for a renewed focus on drug prices at that time.
Expect new regulations from the FDA, the FTC and CMS, with a focus on pharmaceutical advertising, patents and intellectual property, and pricing/transparency.
The ongoing battle between hospitals and pharma companies over the 340B drug discount program will continue. It’s unclear whether either side will emerge victorious.
Health insurance co-pays and deductibles can be expected to continue to increase next year. That means more money “out-of-pocket” for healthcare. And that means many of us will end-up paying more at the pharmacy counter for our drugs. We will not be happy.
Another 54 branded drugs – and their manufacturers – are facing patent cliffs and the end of exclusivity in 2024. The total will grow to 190 drugs by 2030. Generics and price-competition will follow.
Plan For Multiple Outcomes
Pharma companies and their market access teams should begin scenario planning for these major events – if they haven’t done so already. Senior executives should include team members in finance, legal, and R&D functions in these discussions. Even if your company’s product (or products) does not likely fall within any of these categories, it is critical to plan for as many outcomes as possible.
Plans are worthless, but planning is everything, President Dwight Eisenhower once said. He was referring to his time as a general, but pharmaceutical executives would be wise to follow his advice in 2024.
Al Jackson is a consultant at Valuate Health with over 25 years of experience crafting policy strategies for pharmaceutical and biotech companies, medical device manufacturers, medical professional societies, trade associations, government, and patient advocacy organizations.