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Value Based Pricing Opportunity?
· Drug manufactures should be incorporating more value-based pricing strategy and planning in the U.S. As pricing shifts continue to change in the U.S. and move downward, now is the time to study the potential impact of how value-based pricing for drug treatments.
· LifeSci consulting can help develop, model, and test various value-based pricing strategies to determine financial, physician, and patient population impact. It is potentially one key part of a global strategy that has shown a shift in pressure on countries outside the US, and evolving market launch strategies.
· We think the use of value-base pricing will ramp up in the U.S. in the coming month/years.
Medicare and Medicaid Pricing:
· The press conference last week with President Trump, administration officials, and Pfizer was a more of a show with very little details. In our view, this does not signal the true intentions and impact to drug pricing in the U.S. in the future. The administration is going to very short on details to preserve any “deal.”
· We expect another “deal” announcement soon, possibly early evening today.
· Despite all the press on “deals”, what matters most are details around the GLOBE proposal, IRA pricing, and a new proposed program under review called Guarding U.S. Medicare Against Rising Drug Costs (GUARD). What does this mean? The drug pricing program out of CMS is likely much larger than what others are anticipating and not just certain drugs in Medicaid.
· More details will be released when both of these proposed rules/models are released in the coming weeks. The next round of pricing discounts via the IRA is also an important data point, where we expect very steep discounts. Medicare Part B drugs will be included in the 3rd round of IRA pricing discounts.
· We also believe the Centers for Medicare and Medicaid Services Innovation Center (CMMI) will likely roll out value-based pricing ideas via demonstration projects. CMS implemented a Cell and Gene Therapy Access Model involving treatments for sickle cell, but it is likely the agency will attempt to expand similar models in other therapeutic areas.
How Will Commercial Payers React to Government Discounts Via IRA?
· LifeSci Consulting is identifying the likely changes among commercial payers regarding drug pricing over the next couple years, and mapping out different ways to approach payers in pricing negotiations.
· Commercial payers are closely following the dynamics happening in Medicare & Medicare and strategizing how to react when pricing drugs in the pipeline. For some payers, it can be complicated to utilize pricing discounts in Medicare/Medicaid because they are vertically integrated with a PBM, which can complicate any discounts, rebates and shared savings.
· Other payers that do not own a PBM do not have that burden and can move more freely when negotiating value-based pricing drug deals. These payers are more likely to try and move towards discounts announced by the government. There will be greater opportunity at these smaller or regional insurers because the lack of ownership of a PBM.
· The larger payers (who own PBMs) next move is more complex for the reasons we mention above, but also because of an FTC investigation into PBMs and various state and federal proposed PBM legislation or policy measures. LifeSci Consulting is closely monitoring these potential PBM changes and the impact it will have on future drug pricing negotiations by commercial payers.
Pricing via DTC:
· The administration DTC program, aka “TrumpRX” will have minimal impact for several reasons. First, manufacturers are already moving in this direction and have set up their own DTC portals, and while participating in a government run DTC program will present some good will, it will likely have little impact. Second, most of the drugs purchased via DTC are those not covered by insurance, so a small group of drugs.
· That being said, we encourage more manufacturers to set up DTC arrangements for drugs that are not covered by insurers and LifeSci can assist manufacturers with implementation and modeled expected returns.
· We expect more announcements soon regarding “TrumpRX”
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