Patient Access Challenges Are Changing Pharma Investment Strategies
By Jen Klarer, The Dedham Group, and Dinesh Kabaleeswaran, MMIT
What is the top challenge keeping pharmaceutical leaders up at night? There is not one definitive answer. Pharmaceutical executives are facing a multitude of patient access hurdles driven by an increasingly complex, competitive market.
A patient’s ability to receive the treatment they need always has hinged on many factors, from their insurance coverage to their care experience to the affordability and accessibility of available therapies. In recent years, however, patient access issues across the value chain have been compounded by evolving drug cost policies, increased payer creativity in cost containment strategies, and provider reactions to greater financial strain.
Pharmaceutical leaders are attempting to navigate these challenges by changing the way they invest in access data, solutions, and strategy. To properly understand the challenges pharma companies face, it’s critical to understand the ins and outs of the most pressing patient access issues.
Government Policy To Lower Drug Costs
Drug costs are a hot-button issue this election season, with President Biden widely publicizing his efforts to lower the cost of key drugs for seniors, and pharmaceutical leaders are feeling the impact. A recent MMIT/The Dedham Group survey of over 300 pharma and biotech leaders found that the biggest perceived influences on pharma companies’ bottom lines were emerging regulations, value-based payment structures, Medicaid’s best price policy, and the Inflation Reduction Act (IRA).
While concerns about the IRA’s impact fall lower on pharma’s list of priorities, more than 70% of survey respondents are actively planning to address the implications of the IRA. Pharma leaders are anxious to understand how the IRA will impact their revenue and product life cycle planning.
Payer Creativity To Syphon Value
In addition to shifting regulations, payer revenue optimization tactics are widening the gross-to-net bubble for pharmaceutical companies, creating another top influence on pharma’s bottom line, according to the same survey. The undermining of patient assistance programs (PAPs) is a prime example of this, as the growth of alternative funding vendors is shifting more financial accountability for high-cost specialty drugs toward patients.
The use of these alternative funding programs (AFPs) has grown in popularity as a method for employers to improve access but keep their costs low. These unsustainable programs carve out critical treatments from health plans, funneling reimbursement through manufacturers’ patient assistance programs, which are intended for uninsured patients with a true need. As a result, patients can experience access delays and denials.
Payers are also increasingly using copay accumulators and maximizers, which drain funds from copay assistance programs. Not only is this also a misuse of manufacturer funds, but these programs can leave patients with unaffordable out-of-pocket drug costs, which can lead to treatment abandonment. These programs put tremendous stress on the pharma value chain.
Provider Reaction To Financial Strain
While payers are still key players in the value chain, pharma is shifting toward a multi-stakeholder approach to ensure greater access and coverage for patients. As payer reimbursement dynamics and government policies evolve, providers are required to become fluent in access and reimbursement dynamics to ensure they can keep their lights on.
Because providers are facing greater financial pressure, they are increasingly leveraging the 340B Drug Pricing Program, which was ranked as another top influence on pharma’s bottom line in the survey. This federal government program requires drug manufacturers to provide heavily discounted outpatient drugs to eligible healthcare organizations, reducing the costs of outpatient pharmaceuticals for patients.
Lately, 340B drug pricing exposure has expanded, driven by ongoing market consolidation and acquisitions as well as the 2023 Genesis healthcare, Inc. v. Becerra ruling. With almost two-thirds of the hospitals in the U.S. now eligible for the 340B program, the breadth and depth of these discounts will put an increasing strain on pharma’s earnings.
As providers are increasingly focused on net cost recovery, they’re also participating in more group purchasing organizations (GPOs). These organizations have historically helped providers cut costs and increase efficiency by negotiating discounts with vendors, distributors and manufacturers, but now, competitive GPO contracting is being driven by reimbursement-related cost pressures. This is causing GPO contracting to extend beyond community channels to include more consolidated lives with PBM-network GPOs, aggregators, and direct-to-account GPOs. Ultimately, GPOs can promote cost savings of 10%-18% for providers, which again puts strain on pharma’s bottom line.
The Solution Lies In Smart Investment
As pharmaceutical leaders try to address these patient access barriers, 84% of manufacturers expect to see an uptick in their access strategy investment in the next three to five years. Drivers of this trend include increased competition in therapeutic areas, the need for a 360-degree perspective across the drug development life cycle, and the promise of real-world data (RWD) to address complex challenges. In particular, demand for real-world insights is rapidly growing as entities like the FDA back more RWD-driven studies. Real-world data organizations like Atropos are gaining momentum and funding, showing the importance the industry as a whole is placing on RWD.
Outside of leveraging data, manufacturers are also engaging in early-stage market access planning. Pharma companies are conducting access activities like coverage and reimbursement scenario mapping, as well as evidence generation and resource development planning, much earlier in pipeline development; in some cases, as early as Phase 1 trials. In fact, according to a recent survey of industry stakeholders, 87% of pharma companies are now beginning access planning before Phase 3 trials.
The shift toward earlier patient access planning reflects the amount of pressure pharmaceutical leaders are under. Although market forces will continue to exacerbate existing access barriers and likely generate new challenges, an early approach to access assessment and mitigation will help pharma companies overcome these barriers. By investing in comprehensive market access strategies and embracing innovation, pharma leaders will be able to ensure their therapies are available to patients.
About The Authors:
Jen Klarer, M.Sc. Eng, Partner, The Dedham Group, has over a decade of experience in multi-channel market analysis and strategic access optimization, spanning specialty therapeutic categories including cell and gene therapy, oncology, immunology, and rare disease. Her varied expertise spans areas including coverage and reimbursement modeling, provider site activation planning, and commercial operations configuration to optimize patient reach, which encompasses distribution, patient services, and field team execution. Jen has a Bachelor of Arts in chemistry from Franklin & Marshall College and a Master of Science in biomedical engineering from Columbia University. Prior to joining TDG, she conducted six years of academic research, including preclinical study of an autologous cell therapy for critical limb ischemia.
Dinesh Kabaleeswaran, Senior Vice President, Consulting and Advisory Services, MMIT, has a decade of experience in market access, supporting customers in their pre-launch and post-launch strategies across oncology, non-oncology, and immunology therapeutic areas. Dinesh received his master’s in bioengineering from the University of Pennsylvania, focused on neuroscience and mathematical modeling. After a stint of healthcare consulting at the Wharton School, he developed a strong interest in healthcare market research. He now oversees MMIT’s Market Research and Advisory Data Intelligence teams, as well as its Analytics and Insights services, providing market access insights to pharmaceutical companies to help them successfully launch and promote their products in a rapidly changing environment.