Pricing and market access strategies to drive commercial success in the US
What strategies were implemented by current and former blockbusters to optimize pricing and market access in the US?
Lipitor (atorvastatin)
Nexium (esomeprazole)
Humira (adalimumab)
Advair/Seretide (fluticasone/salmeterol)
Abilify (aripiprazole)
These are all familiar names in the world of pharma thanks to their former or current blockbuster status.
How do you successfully attain blockbuster status?
Many factors contribute to the commercial performance of a drug, but these days having a clinically effective drug is not always enough to differentiate your product and secure commercial success. Pricing and market access must be optimized, and there’s one market where Big Pharma can’t afford to get that wrong - the US. In fact, US sales often account for 50% or more of a blockbuster’s annual revenue, demonstrating how much of a priority market it is.
For example, if we deep dive into the annual reports of blockbuster manufacturers, we can see that, prior to losing patent protection, US sales of Lipitor and Humira accounted for 53.6% and 67.1% of their worldwide revenue.
Sources for data: Lipitor data can be found here. Humira data can be found here.
So, Pharma needs to be successful in the US.
What strategies have been implemented to optimize pricing and market access in the US, and support a drug on its way to blockbuster status? Reviewing the strategies implemented by former and current blockbusters identifies some key themes.
Negotiate better coverage versus competitors.
Many manufacturers of blockbusters negotiate rebates or discounts on drugs to pharmacy benefit managers (PBMs) and healthcare plans in exchange for better coverage versus their competitors.
Better coverage may be exclusive placement on formularies or preferred tier placement. The latter is a strategy commonly used to increase the adoption of a specific brand in a therapeutic class of similarly priced drugs because it results in the contracted (or most competitively contracted) drug having a lower patient cost-sharing burden versus competitor drugs.
Secure less utilization management versus competitors
Some blockbuster manufacturers have successfully negotiated fewer or less restrictive prior authorizations on their drug versus competitors. Additionally, some have also been able to position their drug as the first step in a specific treatment pathway making it the first-line treatment option for the majority of patients at a specific plan.
These strategies can increase the utilization of a drug as most patients must try it before coverage of other treatment options is approved, and because it’s the treatment option with the least amount of paperwork and access barriers.
Reduce the patient cost-sharing burden
In addition to lower or preferred tier placement, there are other mechanisms to reduce a patient’s cost-sharing burden. For example, co-pay savings cards and coupons may be offered to patients who meet certain criteria to ensure affordability challenges do not limit their access to a drug or negatively impact adherence.
However, it’s important to note that the longevity and impact of this strategy is currently being put to the test via the implementation of copay accumulators and maximizers by some healthcare plans or PBMs.
Sources for data: Nexium. Humira. Abilify.
Another mechanism that can reduce patient out-of-pocket costs is the inclusion of a drug in a preferred pharmacy network. Pharmacies in a preferred pharmacy network contract with a healthcare plan at a lower reimbursement rate in exchange for increased volume, and plan enrollees can benefit from cost savings in these networks via lower copays.
Give financial assistance to patients
Some manufacturers have implemented Patient Assistance Programs that provide limited free product or financial assistance to uninsured and underinsured patients who meet certain eligibility requirements. Such programs may come in the form of a 1-month free trial period or voucher programs that could be used by patients for a specific time while they change healthcare plan.
Leverage data to highlight value
This one is part market access strategy, part payer marketing strategy.
Manufacturers may present clinical and economic data (trial data or real-world evidence) to demonstrate their drug’s efficacy, safety, and cost-effectiveness, which they can leverage in negotiations with PBMs or P&T committees to secure preferred status on formulary. The manufacturer’s position in such negotiations is strengthened if KOLs and treatment guidelines also recommend the drug in a specific line of treatment or certain patient populations.
Protect the Patent
Many blockbusters have been able to delay generic or biosimilar competition by filing for additional indications that extend the market exclusivity period of a drug. This lifecycle management strategy protects market share and reduces price erosion.
Additionally, if a drug has more approved indications than a competitor it can be easier for the manufacturer to negotiate preferred placement on formulary, facilitating some of the strategies mentioned above.
Payment by results
While a decade ago this strategy was rare, today more and more manufacturers are leveraging risk-sharing agreements to secure coverage for high-cost, innovative drugs, by tying actual costs to outcomes. If a patient doesn’t achieve an agreed clinical milestone then part of the cost of the drug is rebated back to the PBM and/or healthcare plan, spreading the financial risk for drugs with limited evidence packages and therefore greater uncertainty of their clinical efficacy and economic value.
Conclusion
Overall, pricing and market access strategies that secure favorable formulary placement for a drug versus its competitors and reduce the patient cost-sharing burden have been instrumental in increasing patient access, market share, and patient adherence in the US for some of the most well-known blockbusters.
However, Pharma’s ability to leverage these strategies will be limited for future specialty drug launches as more US payers implement benefit design strategies (e.g. specialty tiers, deductibles) with higher patient cost-sharing requirements.
Manufacturers will need to develop new solutions and tools to resolve patient affordability challenges or re-think their pricing strategy to ensure affordable, adequate, and competitive access.
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Cover photo credit: Photo by Felix Mittermeier on Unsplash