Latent Benefit of Access Restrictions for Rare Conditions

Ira Studin, PhD

President,

Stellar Managed Care Consulting

There is an axiom in football that offenses should take what the defense gives you. This logic can be applied to payer access restrictions and pharmaceutical pricing for rare conditions. While restrictions present barriers to utilization, with rare conditions they also support optimal pricing.This is the latent benefit for brand performance.

Optimal pricing is possible for two reasons: 1) very small treatment population; 2) evidence driving restrictions for the population covered. The combination of limited population plus evidence behind restrictions creates leverage brand teams can utilize.

The suggestion here is that for products developed to treat rare conditions, future planning should include leverage as a strategic capability for future action.

PRIOR AUTHORIZATION AND ACCESS RESTRICTIONS

Prior authorization (PA) limits access for treatments of rare and many other conditions. For rare conditions, the PA typically involves: 1) detailed checklist; 2) lab, genetic, and other confirmatory tests; 3) clinical notes; 4) as-needed documentation, such as biopsy.

Invariably, elements that comprise these four components are drawn from the pivotal trial. Through their PA, payers appear to adopt three basic levels of restriction: 1) standard; 2) tighter than label; 3) non-formulary.

Standard restriction. Coverage is to the indication and the PA confirms the patient condition matches the indication.However onerous to PA, medical policy is not adding restrictions to reduce the size of the covered population.

Tighter-than-label restriction. Risk for this restriction emerges if the indication is broader than the evidence in the trial. For example, the indication may cover all ages but trial patients fall within a specific range, or the indication covers all acuity levels but patients fall within a specific test score range.

This restriction can only occur in a commercial population because Medicare requires coverage to the label.

Non-formulary restriction. Since there is no formulary under a medical benefit, non-formularycan only apply to products covered under the pharmacy benefit for commercial plans and Part D for Medicare.

The impetus for this limitation is adverse selection; the justification is that physicians can always pursue coverage under a “formulary exception” appeal.

POPULATION SIZE: LEVERAGE FOR PRICING

Payers take for granted that the smaller the market, the higher the price. Consequently, products for rare conditions have leverage to price progressively higher as they move across the continuum from standard restrictions to tighter than label to non-formulary.

A comment from one health plan medical director illustrates the general rule for any restriction level: “You can’t deny it if patients meet all the criteria.” Under these circumstances, while contracting with payers is not needed, a risk contract creates added leverage for pricing beyond what the manufacturer might feel is the upper limit.

The counterpoint to risk contracting is that payers are not fans. They tend to believe “the juice is not worth the squeeze.”

CLINICAL BENEFIT: LEVERAGE FOR RESTRICTIONS

Because products for rare conditions come with extremely high pricing, an effective payer value proposition is inherently problematic. What payers focus on is clinical benefit. Building leverage through clinical benefit is, arguably, one of the most important core competencies a brand team can develop.

Central here is mastery of the pivotal trial so all data can be fully leveraged. Aside from outcomes data, payers focus on: 1) timing on separation of the curve; 2) slowing progression; 3) magnitude of benefit; 4) durability of benefit; 5) granular efficacy data.

In addition, replicable medical cost offset data represents potential leverage to push back against overly restrictive policies.

LEVERAGE AND PRACTICAL ISSUES

Four practical issues can be anticipated where leverage is needed.

Clinical benefit leverage: 1) resources physicians can draw on to work through PA denials; 2) requirements prescribers will need to secure reauthorization.

Problem-solving leverage: 1) operational and reimbursement problem-prone areas in distribution; 2) situation-specific hurdles under medical and pharmacy tracks.

Ira Studin, PhD, is President, Stellar Managed Care Consulting. He can be reached at istudin@stellarmc.com.