Demy-Colton panel explains how to make your market access strategy real ahead of Phase III trials

In the article below, we summarize key takeaways from this webinar. You can access the first part of the series, and register for the third part of the series online here:

April 27: "The Foundation: The Basics of Market Access and Why They Matter Before Phase IIIs"

May 18: “Future-Proofing: How to Prepare a Value-Based Market Access Strategy”

Building off the foundational lessons provided in part one of this year’s Demy-Colton webinar series on U.S. health care market access, Alice Valder Curran, partner in the Hogan Lovells health practice, emphasized that pre-commercial companies should focus on their market access strategies “at least before your Phase III trials but ideally even before then.” Access is the most important factor of success in the U.S. market, Valder Curran noted, and must be a research and development imperative as well as a commercial imperative, not least because it impacts the design and execution of a company’s clinical trial strategies.

The panelists presented a hypothetical company having a potential “Product A” to demonstrate how government and commercial payer considerations can impact both venture capital funding decisions as well as clinical trial and product development strategies to best position the product and company for success.

Adrienne Ellman, partner in the Hogan Lovells mergers and acquisition practice, described a hypothetical “realistic” pre-clinical company, which has identified a small molecule lead candidate “Product A” for which it expects to file an Investigational New Drug (IND) application within the coming months. The company is now seeking additional financing to help cover the projected costs of their planned Phase I clinical trials. Lynn Mehler, partner and Practice Area Leader of the Hogan Lovells pharmaceuticals and biotechnology practice, and Co-Head of the firm’s Life Sciences & Health Care industry sector, further described “Product A” as believed to be effective for three different rare diseases, through weight-based dosing by infusion administered in a physician’s office from a single-sized vial, as well as for a broad indication at a lower, fixed dose self-administered by autoinjector or pre-filled syringe. If successful, the company is considering pricing at U.S.$350,000/year for the rare disease indications and U.S.$50,000/year for the broad indication. The company has assessed competition as limited for the rare disease indications, but has several existing competitors for the broad indication. The company also intends to pursue a single New Drug Application (NDA) for all indications but will seek approval for the broad indication under a different brand name than the rare disease indications.

Tess Cameron, Principal, Strategic Finance at RA Capital Management, then provided guidance on the approach that venture capital investors take for pre-commercial companies seeking financing. In essence, Cameron noted, VCs are trying to distill down certain key points: 1) what the product is worth if it works; 2) the probability of success; 3) how much money and how much time will it take to determine “if it works”; and 4) how understandable (“perceivable”) the value proposition is. Cameron noted that market access is a key part of the “what it's worth if it works” analysis, and commented that investors will therefore do their own diligence on this aspect. Regarding the nuances of Product A, for example, VCs would consider the likelihood that a single NDA would be compatible with a differential pricing model, and whether the differential pricing proposal in general was likely to be effective. In response to a question from Valder Curran, Cameron further explained that several comparable companies exist that have successfully commercialized rare disease indications independently, making the value creation from these indications more “perceivable."

Ellman then provided guidance on how a company can prepare for the questions from sophisticated investors. Ellman emphasized the importance of preparation for what is likely to include a three-headed diligence approach, including: 1) a very deep dive on the science, intellectual property, and regulatory work already completed by the company; 2) other legal and corporate aspects such as contracts, non-disclosure agreements, and appropriate assignments; as well as 3) a financial component beyond the scope of this seminar. Ellman noted that for life sciences companies “it really benefits everybody … to be as comprehensive in those diligence responses as possible” by preparing a responsive data room showcasing what the company has done. Ellman noted that it sometimes surprises companies that they are asked by prospective investors to provide their actual, raw data so that investors can dig in and validate it themselves. Ellman emphasized that it is worthwhile to spend time leading up to financing on this kind of documentation to best showcase what the company has done in a way that investors can understand. This theme was continued by Cameron, who noted that in considering a “Target Product Profile” for Product A, while it is always helpful to get the company's perspective on pricing and rationale, investors will also almost always do their own diligence on key aspects of the investment thesis, which for Product A would include the regulatory strategy and the probability of commercial success. Regarding the regulatory assumptions for Product A, Cameron noted that the proposed multiple indications within one NDA sounded “tricky” based on Mehler’s earlier discussion of the risks.

Mehler expanded on the FDA development road map for a product with multiple possible indications, noting that it is important to “be deliberate about thinking through” regulatory strategies, such as selection of a lead indication. Mehler mentioned a variety of factors to consider, such as balancing the perceived faster approval process of a narrower indication with enrollment challenges, the FDA review division for each indication, patent strength and likelihood of exclusivity, as well as how to plan for follow-on indications, including development of data to support later indications to avoid starting from scratch. In considering clinical trial design, Mehler noted that the opportunity to assess multiple endpoints, as well as diversity in clinical trials are also important considerations. Product A having proposed autoinjector dosing also raises device issues. Mehler emphasized the value in thinking through these “tough questions” and planning in advance to have data to provide to FDA for an efficient development and approval.

Valder Curran returned the Product A analysis to the four foundational questions presented in session 1:

1. Indications: What are the indications that my molecule is being studied for, and what is the order in which you are currently planning to pursue study and approval?

2. Payer Mix: For each of those indications, who will pay for the drug (e.g., Medicare, Medicaid, or a commercial payer)?

3. Dosing: What is my dosing and in what product presentations? (e.g., weight-based vs. fixed amounts)

4. Pricing: What is my pricing strategy, and should I revisit [based on that strategy] the order in which I plan to pursue study and approval?

The panelists framed each of these factors for Product A, and teased out where there could be potential hiccups for its contemplated market access strategy. Valder Curran highlighted a number of possible tensions in the proposed approach for Product A, including a consideration of whether, under Medicare, the broad indication would impact whether Product A would be eligible for Part B payment at all, as well as whether the products are “therapeutically equivalent.” Valder Curran also discussed considerations for Medicaid rebate and Pharmacy Benefit Manager (PBM) strategies of the proposed broad indication, and whether there would be a risk that rare disease patients would move to the lower price dosage forms. Valder Curran also discussed some of the pricing constraints arising from the proposal to have a single vial size on the proposed weight-based dosing for the rare disease indications.

Turning back to her key considerations, Cameron noted that it is important for companies to consider what plans they have in place to be able to finance and commercialize Product A’s proposed indications as part of a “go it alone” strategy, and what this looks like for the rare diseases and for the broad indication. This will help prospective investors understand whether differential pricing would be a realistic goal. Ellman expanded on this, noting that companies often position themselves for a particular type of exit, with the idea that at some point down the line they will sell the company or the product at that time. But Ellman urged that companies should “always plan to go it alone” and have a plan to commercialize the product and bring it through to the market rather than simply planning for an exit. Ellman noted that this strategy will better position a company not just from a funding perspective, but also potentially for a future M&A deal. Cameron agreed, noting that this “shows why market access is so important” and that it is crucial for companies to have a good value creation plan.

The full webinar summarized above is available to view online here, and our summary of the first webinar is available online here. In the final session, “Future-Proofing: How to Prepare a Value-Based Market Access Strategy,” our panelists will provide strategies to prepare for possible changes in existing regulations.