Five reasons you can’t ignore payers during pipeline development

Could previously launched drugs that significantly missed sales expectations have met a different fate if their manufacturers had accounted for payer perspectives in their early-stage development strategy?

Let’s start with some stats.

-    About half of the drugs launched in the last 15 years underperformed analysts' sales estimates by more than 20%1
-    Only one-fifth of new meds reached $1 billion in U.S. sales, and more than half failed to hit even $250 million2
-    The average cost to develop a drug is close to $1 billion2 with the average, even for drugs that have reached phase 1 trials exceeding $425m3

Selecting a molecule or an indication in the pipeline development stage that doesn’t provide sufficient return on investment can result in significant financial losses for a company. In fact, for small and mid-sized manufacturers, bankruptcy is a very real possibility. The importance of factoring in payer perspectives and reimbursement dynamics within an indication has become more critical than ever. 

Let’s think about this. Could previously launched drugs that significantly missed sales expectations have met a different fate if their manufacturers had accounted for payer perspectives in their early-stage development strategy?

Clearly, we can’t be sure, but payer perspectives in early pipeline development could have shown K-V pharmaceuticals early on in their development that Makena, as a $1,500 priced drug per dose, wouldn't gain reimbursement when compounding pharmacies were selling an equivalent dose at $10-$204.

Similarly, proactively gaining payer perspectives on reimbursement for new mechanisms of action or new routes of administration could have changed the course of drugs that didn’t meet launch expectations. Companies like Dendreon4 with Provenge, or Regeneron with Praluent, and Amgen with Repatha might have prioritised other molecules/indications in their pipeline, set more relevant prices at launch, or managed the market's expectations at launch better by closely factoring in payer perspectives in early pipeline development. 

So, if we accept that payer perspectives should underpin every stage of pipeline development5, what are some of the insights that manufacturers should seek from payers, pharmacy benefit managers, and potentially even integrated delivery networks? 

  1. Clinical endpoints of priority: Which clinical endpoints are most likely to move the needle in payer management and which are most likely to resonate with P&T decision-makers in a drug's value story? Identifying this in early pipeline development can help you prioritise those endpoints in your clinical trial development for later use in your drug's value story. 
  2. True access in rare diseases: For drugs in rare diseases, although access may be assured given few therapies in an indication, understanding the impact of drug costs on the subtle utilisation management tools used by payers to manage access is important. These utilisation restrictions could include specialist prescribing requirements, quantity limits, shorter initial and reauthorisation durations, and documentation of improvement on therapy for continued access. 
  3. Pipeline optimisation: In instances where a manufacturer has several indications that a molecule could be applicable for, it's essential to understand the competitive and reimbursement dynamics within those indications. This will help to identify and prioritise development into the indications that will have the fewest restrictions, least competition, and best return on investment in terms of fast and smooth access at launch. 
  4. Value of new MOA or ROA: When developing a therapy with a unique mechanism of action or route of administration, you must understand the competitive dynamics within the target indication(s) early in pipeline development. Do payers, PBMs, and IDNs prefer only select routes of administration for that patient population? How open are they to adopting coverage for a new mechanism of action in that indication? What will their management be for such agents where the unmet therapeutic need for patients isn't as significant? 
  5. Validation of TPP and pricing hypothesis: Payers and PBMs can be highly valuable sounding boards on what should be highlighted from a Target Product Profile (TPP), and how various pricing scenarios would impact potential formulary placement or policy restrictiveness within an indication. 

Proactively understanding the U.S. reimbursement landscape from pipeline development is essential, especially for small- and mid- sized companies or companies that are entering into the US market with their first treatment. Using P&T decision-makers as a sounding board during asset evaluation, early-stage pipeline development/optimisation, and as a company nears launch can significantly impact the success of a drug. It can help manufacturers feel more confident in communicating a solid value story for their treatment, and in turn gaining parity or preferential placement on formularies and policies.

Sources:
1 - https://www.fiercepharma.com/pharma/half-drugs-launched-last-15-years-failed-to-meet-wall-street-s-expectations-report
2 - https://jamanetwork.com/journals/jama/article-abstract/2762311
3 - Evaluate Omnium
4 - https://www.fiercepharma.com/special-report/10-top-drug-launch-disasters
5 - https://www2.deloitte.com/us/en/insights/industry/life-sciences/pharmaceutical-pricing-market-access.html
 

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