Demy-Colton panel explains importance of U.S. market access planning ahead of Phase III trials

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

May 4: “Making It Real: What Does an Early-Stage Market Access Strategy Look Like?”

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

Kicking off this year’s Demy-Colton webinar series on U.S. health care market access, Alice Valder Curran, partner in the Hogan Lovells health practice, urged sponsors of new drugs that “a little bit of work on the front end can make a huge difference in creating greater flexibility for your commercialization strategy and patient access once you finally get that FDA approval and are ready to go to market.” This theme was echoed throughout the discussion, and Kave Niksefat, General Manager of Amgen’s Inflammation Business Unit emphasized how “access has become the single most important factor for success in the U.S. [drug] market,” meaning that conversations around market access should begin in Phase I clinical trials, especially for biotechnology companies.

The panelists centered their discussion around four foundational questions for new drug sponsors:

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?

Summarizing the payers in the U.S. health care market, Beth Roberts, partner in the Hogan Lovells health practice, emphasized how Medicare Part B sets the standard for coverage that other payers in the U.S. market plan to follow. Notably, Roberts explained that whether a drug will be paid for by Medicare Part B often turns on whether a drug is physician-administered, and seen as “reasonable and necessary” by CMS; and that if Part B coverage is not available, drug sponsors will want to seek coverage under Part D. The Medicare Part B and Part D systems “work together,” Roberts explained. Roberts noted that sponsors need to consider how to straddle two approaches: whether a drug will be usually self-administered or will be covered under Medicare Part B, for as long as possible, and be mindful accordingly in the design of clinical trials and the contents of a drug label. Roberts also explained how new drugs used in the hospital setting can qualify for New Technology Add-on Payments (NTAP), and the relevant cost thresholds to meet in order to be eligible for that coverage. Roberts noted, however, that there are exceptions to every rule that could affect coverage and reimbursement outcomes. Responding to questions in the Q&A portion of the webinar, Roberts fleshed out some of the requirements for NTAP qualification.

Roberts highlighted the importance of knowing whether payment for a drug may be “bundled,” or packaged into payment with another therapy, which could potentially reduce the amount that a drug maker can charge for their product. This has several key implications for drug sponsors; for example, a nonpackaged indication should often be brought to market first in order to ensure separate payment for a longer period of time, Roberts advised.

Explaining how to calculate Average Sales Price (ASP), Valder Curran cautioned sponsors that if Part B payment rates are expected for a drug, they will have less flexibility in pricing their drug product if different indications and different versions of the same product are approved under the same drug application. Roberts echoed the importance for a drug sponsor to map out each drug indication being studied, and when they plan to bring that version of the drug to market. Valder Curran said that although sponsors should start product planning with their FDA strategy, there will be a feedback loop involving reconsideration of both FDA and coverage concerns as drug sponsors reconsider their payer strategy. Valder Curran emphasized that it is important for sponsors to make “purposeful decisions about what [they] are pursuing, when, and how.” Roberts also pointed out that labels can be appropriately edited to provide an advantageous reimbursement strategy.

Turning to analysis of non-Medicare payers, Valder Curran described Medicaid as the “payer of last resort,” because it often runs secondary to payment from Medicare, while also noting the importance of stakeholders entering the Medicaid Drug Rebate Program (MDRP). Summarizing the way that federal programs require reporting of drug prices, Valder Curran warned that drug sponsors may not be able to escape the first price they set for the first version of their product, because it may end up impacting their Medicaid rebate for the drug throughout its lifetime. However, Valder Curran spotlighted how there will be distinct pricing data and a distinct rebate amount for each dosage form and strength for each drug (the so-called “NCD-9”) – emphasizing how this is what provides sponsors with flexibility in pricing their drug product in the future.

Discussing concerns with seeking payment from commercial payers and Medicare Part D, Niksefat cautioned that the private health care market is fast-moving and ever-changing. He outlined how the power to decide whether to pay for drugs within Pharmacy Benefit Managers (PBMs) generally falls into three different groups who have distinct roles and responsibilities: the clinical team and industry relations team, the pharmacy & therapeutics committee, and the business/economic impact committee. These teams are focused on finding the lowest net cost of drug products; however, Niksefat explained, PBMs are also focused on ensuring they can fulfill their customer commitments related to the drug, such as their rebate guarantees, which pharmaceutical companies should take into account when they price their product. In all of these considerations, Niksefat emphasized how the future landscape for commercial health care payment remains unpredictable, and therefore, he concluded, “agility is the key to success for drug sponsors.”

In the Q&A segment of the webinar, asked whether it is inevitable that the price paid for medications will erode over time, Niksefat said that industry net pricing is likely to continue to shift downward in the future. Asked whether copay neutralizers are included in the calculation for ASP, Valder Curran explained how a new rule requires any accumulator adjustment program monies captured by PBMs to be accounted for in “best price”; yet, CMS has not issued any guidance on this as to ASP.

Asked about reimbursement for products paired with companion diagnostics, Roberts advised sponsors to ensure that the companion diagnostic is included in the labeling in order to ensure coverage. Asked about differing decision-making roles within PBMs, Niksefat answered that the payer decision-making often falls to the business/economic impact committees.

The full webinar summarized above is available to view online here. The second session, “Making It Real: What Does an Early-Stage Market Access Strategy Look Like?” took place May 4, and walked through real life hypotheticals that incorporate the key learnings from the first webinar. The second webinar is available online here. On May 18, panelists will discuss “Future-Proofing: How to Prepare a Value-Based Market Access Strategy,” and strategies to prepare for possible changes in existing regulations.