Biopharma Must Transform its Payer Launch Playbook

US payers reject 69% of prescriptions during the first year of a new drug’s FDA approval, and these early rejection rates are only nominally improved in the ensuing years.¹ Such a high payer rejection rate is stunning on its own, but this doesn’t even reflect the countless instances when healthcare providers, purely out of a learned expectation for payer rejections, choose to prescribe alternative therapies. Biopharma’s hard-earned FDA approvals, physician trust and patient demand often fail to impress payers as drug manufacturers hope. Demand generation at launch reigns supreme, but poor payer coverage is its kryptonite.

Increased control over prescribing in the last decade has given payers more leverage with manufacturers. As a result, market access rebate trends have reached heights once unthinkable for biopharma, serving as evidence that manufacturers have reluctantly accepted their weakening negotiating position. While biopharma has steered its collective pipeline to therapeutic areas better shielded from payer restrictions (think oncology and rare disease), its playbook to launch drugs with payers has changed only incrementally. A biopharma breakthrough that better establishes the value of new medicines to payers is both overdue and within reach.

Payer coverage decision reviews on newly approved drugs always begin with a tri-fold assessment of a therapy’s value: clinical risks and benefits, physician and patient demand, and only then, projected costs. The importance of manufacturers addressing all three of these criteria through payer messaging is hardly new, but their methods to do so are too often outdated. To reverse current launch trends, manufacturers must transform their payer value propositions (PVPs). This can be accomplished in three ways:

1. Ensure internal stakeholders understand the payer perspective
2. Create resources payers will incorporate into their coverage decision reviews.
3. Build and deploy a payer launch insights engine.

1. Ensure internal stakeholders understand the payer perspective

When companies manage payers from silos, strategies are fragmented, execution is compromised, and patient access suffers. The outsized impact of payers on drug launches demands a deep understanding of their needs and interests that is shared by stakeholders beyond manufacturer market access teams. For most, ensuring all departments are aligned and committed to creating value for payers is a strategic imperative only enabled by new routines.

Understanding patient needs is at biopharma’s core, and a similar determination can be applied to understanding payer needs. Such an endeavor does not begin with costly restructurings or McKinsey-led proclamations about transformational change. It begins by simply elevating the voice of the payer across internal stakeholders and doing so consistently.

While recently preparing for a drug launch, a major manufacturer remotely hosted a panel of experts who fielded questions from executives in marketing, medical, finance, and account management. What made this panel especially credible was their decades of experience leading formulary management discussions for PBMs and health plans, and what made this panel especially relevant was the fact they all conducted market access research with a wide range of payer organizations. But what made this event transformational was the diversity of the audience. Concerns were shared firsthand across all stakeholders and the simultaneous dissemination of insights elevated the understanding—and the thinking—of the broader team.

When executives and marketers can convey payer interests as confidently as market access teams, meaningful alignment is achieved, and real synergies are gained. When preparing to launch a drug to payers, manufacturers can afford nothing less.

2. Create resources payers will incorporate into their coverage decision reviews.

While it is very common for manufacturers to have as few as 1-2 primary contacts at a given payer, the number of people who routinely influence payer drug coverage decisions range as high as 15-20. To positively influence primary contacts at a payer is a good start, but positively influencing the payer’s broader clinical and financial evaluation process is how market access is won.

Relevance drives engagement, and when manufacturers share resources that are tailored to the individual payer’s circumstances, those resources are far more likely to be shared with others involved in coverage decisions. However, only one in four payer decision-makers report that product information provided by manufacturers is specifically tailored to their organization (Formulary Insights research, N=28). In that same study, only 13% of payers feel budget impact models, a staple of manufacturer drug launches, regularly influence their coverage decisions.

The former Chief Pharmacy Officer of Cigna, Rory Davies, shared that “Budget impact models that do not credibly inform a payer’s cost evaluation are readily dismissed, and this is too often the case.”² A deep understanding of how payers will model a drug category’s direct and indirect costs is essential for a successful payer launch. Just as critical is the need to understand what the payers are likely to overlook, and good market research will provide this. Hidden costs associated with titration, drug wastage, and discontinuation rates are just a few common examples of how a single variable can reframe the financial narrative. By infusing payer insights, budget impact models better establish credibility and ensure the launch drug’s true costs are appropriately measured.

Another opportunity to bolster payer value propositions include references that credibly support drug evaluations. Disease backgrounders, existing treatment overviews, and comprehensive reference lists of the clinical evidence are often welcomed as helpful supplements to what is an arduous process for the many clinical pharmacists at PBMs and health plans. The quarterly Samsung Bioepis Biosimilar Market Report³ is a specific example of such a resource that brings value to payers and is easily incorporated into their drug coverage reviews.

The benefits of tailoring resources to individual payers are numerous. They include increased engagement, more constructive dialogues, better competitive differentiation, a more durable influence on the payer’s internal decision process, and stronger relationships.

3. Build and deploy a payer launch insights engine.

Payer feedback tends to echo loudly throughout manufacturer headquarters, especially during drug launches. These insights are extremely valuable but inherently biased by payer negotiators pursuing added pricing pressure. Manufacturers therefore have a significant need to balance this feedback with alternative information sources. Further exacerbating the risk of misreading the market during the critical launch window, key elements of any primary market research with payers conducted prior to FDA approval become outdated the moment an approved label and pricing are publicly revealed to payers.

When a drug becomes FDA-approved, payers accelerate their drug evaluation machinery. Pharmacy & Therapeutics committees generally determine the limits on their organizations’ coverage decisions in the first 60 days, and these limits then inform the value assessment committees (VACs) which seek to exact maximum discounting from biopharma and manage total costs to the payer. For a manufacturer to limit its payer insights to negotiation feedback and past research during this critical window concedes the value of securing game-changing launch insights in near real-time.

Contrast this timeworn routine with a post-approval plan that executes agile, primary market research studies with payer drug evaluators and net pricing decision-makers, and the opportunity to better inform market access decisions during launch becomes clear. With this approach, payer negotiation feedback and past market research are positioned not as a roadmap but as inputs for further testing. The payer landscape faced by a manufacturer is never more dynamic than the months immediately following its approval; presume significant information gaps and have a plan to reduce them.

In an era where the complexities of payer dynamics are rapidly intensifying, the need for biopharma companies to evolve their payer launch playbooks is more critical than ever. Biopharma leaders who proactively reimagine their approach—by deeply understanding payer perspectives, tailoring resources to payer drug coverage reviews, and harnessing real-time insights—will not only better navigate these challenges but set new standards for success in the industry. By committing to transformation, biopharma can ensure their innovations reach the patients who need them most, while also securing the financial return required to fuel future breakthroughs. Now is the time to act; the stakes are far too high, and the trends are far too troubling to rely on yesterday’s routines.

Peter Vaccaro, Partner, Formulary Insights

References

1. Greenwalt, L. (2024, May). Findings presented at the Asembia conference. IQVIA.
2. Direct conversation with Rory Davies.
3. Samsung Bioepis. (2024). Biosimilar Market Report: Q3 2024.