Pharm Exec Roundtable on Market Access

William Looney, Pharm Exec: The biopharmaceutical industry confronts a strategic dilemma: just as the genomics revolution is yielding a rich harvest of biologically-based medicines that promise to raise the standard of treatment for patients, its ability to price these medicines at will is eroding. In response, the drug majors are redefining the traditional one-to-one relationship to payers through messaging with appeal to a broader set of stakeholders as well as detailed evidence to document the medicine's clinical and economic value. The industry calls the new strategy "market access"—is it working, how is the function likely to evolve over the next few years, and what are the key considerations for companies?

Kevin Barnett, Promidian Consulting: My firm has completed a new study that provides insight around this question. Extensive surveys and interviews were conducted with more than 50 leaders from managed care, employers, Medicaid, other institutions, as well as the biopharma industry. Our focus was on elucidating how market access dynamics will evolve over the next five years and defining implications for biopharma companies. We found that there is a very high expectation of change, in 12 relevant areas ranging from the role of biomarkers, IT and comparative effectiveness standards to formulary design, management, and contracting. Interestingly, payers and manufacturers were aligned on the future direction and import of most of these issues. The notable exceptions were in the management of specialty drugs, where payers expect increased scrutiny, and on the role of comparative effectiveness, where payers are more bullish than manufacturers in thinking that use of this particular tool will increasingly drive pricing and access decisions.

With specific reference to the 12 "change drivers" we identified, the growth of personalized medicine through biomarkers and companion diagnostics scored the highest in terms of the expected degree of change over the next three to five years. Both groups understand that this is a positive trend because all these tools have a common objective: to improve outcomes and avoid inappropriate utilization by getting the right medicine to the right patient at the right time. This is the essence of "managed" care, one where the patient is the chief beneficiary.

Right behind this as a change driver is IT and how it will shape prescribing patterns, particularly as incentives for EHR and other integrated systems are implemented, at the practice level. IT is a key enabler of the third highest degree of expected change, which is the role of emerging models of care like the ACO, where the "episode of care" approach depends on having information systems that can talk seamlessly to each other.

We spoke with managed care firms and other payers about whether these new models would succeed in saving money while improving quality. The consensus is the jury is still out, largely because earlier efforts to integrate care failed to take root; these are in many ways a pilot effort. Ultimately, ACOs may prove an interim step in what is likely to be a lengthy journey toward a common delivery platform—one that binds patients, providers, and payers around a more efficient approach to treatment.

Benefit design issues came next as a change driver. Clearly, the structures by which patients access care are in flux. There is a great deal of exploration underway—focused on coinsurance, deductibles, and preferred/non-preferred tiering of formulary access—to find the right balance between quality of outcomes and containment of costs. One issue from our discussions is how the insurance benefit offered under the Affordable Care Act's insurance exchanges will influence private insurance plans. The exchanges are likely to offer drug benefits less robust than what is currently offered on the private commercial side—will we see a spillover of that trend to the private market? That's an important question for both manufacturers and payers.

List of Participants

Next on the list of expected changes is the management of specialty drugs. Most of the drugs being approved by the FDA are specialty, and Express Scripts forecasts that only five years from now this category will account for half of total drug prescription expenditures, up from 25 percent today. The price tag for these therapies is a major pain point for payers, of which manufacturers are all too aware.

Progress and pitfalls

Looney: Does the study identify the therapeutic areas most likely to set the agenda on market access over the next three years?

Barnett: Yes. We asked managed care decision-makers to identify the disease areas they would prioritize in managing drug utilization and expenditures during this period. Oncology came out on top, followed by rheumatology, diabetes, respiratory, orphan diseases, neurology, and obesity. The common link here is the impact that actions by both manufacturers and payers can have on addressing unmet medical need. Targeted therapies for cancer that address the etiology of the tumor is a clear example, and their novelty in raising the likelihood that the medicine will end up in the patients most suited for it suggests access can be secured at a premium price—a win for manufacturers. In diabetes, the number of new patients with all the co-morbidities of this disease continues to expand the market. Economically, it's a huge burden for payers and there is strong interest in any medication that will help lower the overall cost of treatment. We found too that the science of diabetes looks promising, with new classes of drugs coming on stream that attack the disorder in different ways. There is a big potential innovation premium here for industry.

Obesity scored the greatest increase in interest as a priority therapy over the forecast period. Some of the same co-morbidity factors driving diabetes are at work here. The pipeline for new products with fewer side effects looks promising. And payers appear willing to reimburse obesity treatments because of the impact on population wellness, which translates to lower health costs.

Looney: The biopharma business is uniquely affected by public policy and legislation. Can we identify from the study the key challenges coming on the regulatory front?

Barnett: Executives on the managed care side are very focused on the implementation of the Affordable Care Act. Uncertainty is the prevailing sentiment. It remains to be seen if this complex law is a growth opportunity. Will expansion of the Medicaid-eligible population as well as the individual insurance exchanges create a windfall of new customers whose healthcare needs can be met at reasonable cost, through a balance of young and healthy against an older demographic with serious health risks? Another issue is coverage rules for drugs, including formulary management and related design questions, which are impacted in turn by rules on whether manufacturers can offer co-pay offset and coupon incentives directly to patients in the exchanges.

The study also looked at the prospects for biosimilars. A bare majority of respondents from the managed care/payer side believe biosimilars will become widely available to US patients in the next three years; there is a stronger consensus that, if this happens, we will see downward pricing pressure on drugs that lead to meaningful savings for payers. Realistically, however, most payers contend that discounts of at least 30 percent against the originator brand will be required to deliver any real savings.

Finally, the managed care group struck a distinctive note on comparative effectiveness rules. Surprisingly, most aren't currently employing this evidence tool to shape decisions on formulary coverage. Interviewees said they are waiting for relevant government agencies like CMS to take action; many point to internal resource constraints as the culprit in their failure to making it a priority.

Structural transitions ahead

Jim Smeeding, National Association of Specialty Pharmacy: Did the study confirm the trend toward a blurring of the roles played by payers and providers in the healthcare system?

Barnett: Yes. The ACO model with its focus on episode of care as an alternative to traditional fee-for-service is viewed as here to stay. If payers want to reduce costs, it requires that they embrace the concept of active medical management; it's no longer financially viable to act as a passive third-party.

Closed information loops

Sanjay Shah, Optimal Strategix Group: There is some way to go before we have truly integrated care in the United States. This is because actions by all parties—providers, payers, and manufacturers—remain driven by disjointed financial incentives and misalignment on assumed risk that are hard to reverse. Europe is further ahead, having embraced payment schemes that are built around performance and outcomes, expressed via the accumulation of evidence of comparative effectiveness (which differs from efficacy established in well-controlled clinical trials) through post-approval observational studies, in the real world setting. It is possible that policy pressures in the expensive, high- profile specialty biologics segment might accelerate a similar transition here.

Barnett: Payers we interviewed will be demanding progressively higher substantiation of clinical effectiveness for these biologics. They admit, however, that creating workable criteria to demonstrate value—criteria that are mutually acceptable to payers and manufacturers—is still a work in progress. Support is strong on a conceptual level but the goal now is to move from that to something that you can actually measure. If by uniformity you mean the United States will evolve toward a single federal standard of cost effectiveness, I suspect this idea will be fiercely resisted, not just on methodological grounds but because of the politics.

Kara Clinton, Eli Lilly & Co.: There is substantial discussion on how to manage and reduce costs in healthcare. Information and data will continue to be critical as we examine disease and treatment costs holistically. Pharmaceutical prices are relatively transparent and have been a major focus of reducing costs. However, drugs are often not the major driver of the expense of treating a patient. To reduce healthcare costs, stakeholders should start with accurately measuring and comparing all costs with improved transparency and data. It is also important to capture cost offsets and savings in different treatment options. What does it cost to treat an individual throughout the full course of a disease? This is the key principle in aligning market access with treatment outcomes, in an affordable way.

Joshua Parks, Valeant: The situation in Europe today suggests it may be naïve to assume that better information combined with the right clinical profile will result in patient access to a new drug. The patient population is increasingly diverse, so it follows that there is an equally diverse range of opinion on what constitutes improvement in the standard of care. All the industry's computer models will have little influence on that determination, which most often ends up being, "we just can't pay for it." This is the direction European countries are taking, and it will be interesting to see where that leaves the European-based industry three to five years from now. Precedent shows that there will be less innovation and slower uptake of newer drugs.

Looney: Don't we need to start with an agreed definition among payers and manufacturers about what the concept of "effectiveness" really means? Does it apply to clinical standards only or does it incorporate cost?

Smeeding: It carries a very broad scope. Some of the larger provider and managed care organizations have evolved their own internal definitions. Efforts by the networked academic organizations like ISPOR have also brought the various interests together, which is critical as the mechanics of effectiveness evaluations must make sense to the insurance providers first, because they are the ones who pay the bill. But drug makers will confront price resistance, regardless of the degree of consensus on standards. It's always been a contest of wills to wrest a good price from a payer, and I don't expect that to change very much.

Sanjiv Sharma, Duchesnay USA: Each provider wants to design their own cost effectiveness model because everyone in the business claims their covered patient base is unique. The practical implication is a drug manufacturer is forced to do endless variations of the same thing to accommodate this pretense.

Brendan Bertsch, Optimer Pharmaceuticals: In the United States, no standard for effectiveness can include a frank assessment of cost. Only clinical applications are permissible; anything beyond that entails endorsement of rationed care, symbolized by the "death panels" that are supposed to be implicit in the Obamacare legislation. European precedents don't travel well here.

Michael McLellan, Pfizer: Criteria for effectiveness in Europe seems to focus predominantly on cost, so much that one might suspect that in some countries, the institutionalized process known as health technology assessment [HTA] is more of a political tool masquerading as an objective evidentiary standard. It provides an opportunity for payers to tactically create negative assessments prior to negotiating a reimbursement price. The lack of objective and scientific benefit assessments becomes clear when a manufacturer can submit the same dossier of evidence for the same drug to HTA authorities in a number of countries and get a very different conclusion in each one. It would be unfortunate if these assessments amounted to no more than a clever way to manage a fixed budget for medicines, instead of identifying true innovations that benefit patients.

The situation could only change if the agency doing the benefit assessment was not so closely tied to the payer negotiating reimbursement. There are efforts underway to create a pan-European assessment process on relative effectiveness. Opinions differ, but my view is that this is unlikely to improve the current problem of HTA bias and lack of objectivity, in a way that rewards drugs addressing unmet medical needs. That's because all reimbursement negotiations are inherently political; payers in countries controlling access to new drugs are unlikely to relinquish direct control over the HTA process. The group coordinating the pan-European HTA assessment pilot, the European Network for Health Technology Assessment [EUnetHTA], consists of representatives of the national HTA agencies. You can't expect them to support any significant changes to the status quo in their home countries, as it would adversely impact their prerogatives as the gatekeepers on patient access.

Sharma: Throughout my career, I've been closely involved in negotiations on clinical and cost effectiveness standards, in Canada as well as the United States. My experience leads me to conclude that the only way industry can avoid making this process a narrow budgetary and financial calculation is to engage the patient. Putting forward an articulate patient perspective is unsettling to the payer—which actually confirms we are doing the right thing. Patient involvement tilts the discussion away from a focus that is exclusively about the cost of therapy.

What do payers want?

Richard Stefanacci, University of the Sciences and the Access Group: Through my work as chief medical officer for a number of Medicare Advantage plans as well as membership on a national P&T committee, I can say there are only two things that drive payers on market access. The first is return on investment—not just what do we get by listing your drug, but, more important, how soon? No longer do payers want to be told about savings over a 10-year time span. Their fallback position is to eschew any immediate decision on coverage, in favor of "watchful waiting." If manufacturers want to avoid this outcome, being able to make that case for ROI is critical. The second driver for payers is regulation. If we are told we must cover a drug, we do it. Academic judgments about cost effectiveness have little, if any, impact on the decision.

I am intrigued that in the survey, respondents from both the manufacturer and managed care side seemed to downplay the role of the patient. In this new healthcare environment, manufacturers must position value from the point of view of the patient, not just the provider. As patients will be forced to bear more of the cost burden, their adherence will be based more on how they perceive value.

Smeeding: As costs for drugs mount, particularly for life-threatening conditions like cancer, patient access programs will become a critical ethical issue. There are a lot of uninsured and under-insured people where the pressure will be intense to get them on therapy. Such programs are predominantly company-sponsored but I predict we will see more government involvement in how these programs work, and for whom.

Parks: Europe is already there. In contrast to the United States, national authorities have to reconcile two conflicting commitments: first, to offer the broadest access possible to all citizens, and, second, to contain costs within a fixed annual budget. Their response offers a precedent for the United States: It requires some people—those with more assets—to pay a bigger portion of their health costs out-of-pocket. Overall insurance cover is important, but patient share of costs is going to be right up there too.

Stefanacci: The trade-off for patients from the Affordable Care Act is lower plan premiums through government programs like the Health Insurance Marketplace plans and Medicaid, partly as a result from restricted access to providers and certain types of care, including drugs as well as higher patient cost sharing.

Clinton: Payers are interested in data on how biopharma technologies improve outcomes for a defined population relative to the current treatment standard. In oncology, with rapidly changing treatment standards, this can be a significant practical challenge for companies. Traditional Phase III trials have protocols and standards that are approved by regulators years in advance of the trial completion. By the time results come, the standards can evolve and the relevance of the data can be challenged. There are efforts with regulators to address this issue, but it is a current risk that biopharma must take as a given in the development process.

McLellan: Payers need to provide industry a feasible way to develop the evidence they are asking us for, so that it is not a constantly moving target. Right now they are not doing this. The non-binding consultations we have with them do not allow us to agree on what will constitute a data package to ensure access for drugs that have a meaningful benefit, including what should be the right comparator. This is going to discourage future innovation. I submit that it is in the payer interest to play this game, and it starts with a fair playing field to help us work through the payers' fear of the budget impact of true innovation, in areas of unmet medical need, because these innovations do not always carry a cost saving or cost offset.

Innovation—the moving target

Shah: The cost challenge is compounded by the lack of consensus on how to decide which innovation creates value. Not every player in healthcare shares our view of what we would characterize as innovative. I recall inviting a senior executive from Humana to participate in a payer advisory board for a J&J compound we were developing for diabetes. He noted that, at his company, innovation was rarely described as coming from a bottle. Instead, innovation came in a Nike shoe box, because it motivated employees with diabetes to exercise.

What’s Next for Market Access?

McLellan: It is commonly assumed that it is up to the payer to define innovation. Not true: their first responsibility is to allocate a fixed budget. You cannot pay for things with money you do not have. The concern is how payers are managing the process. It is not a coincidence that virtually every preliminary benefit assessment of oncology products by NICE in the United Kingdom is negative, regardless of the clinical data presented or the patient access scheme we present upfront. Another new trend I find alarming is the separation of the benefit assessment [the value] and reimbursement negotiations [the price] in countries like Germany. This puts manufacturers in a difficult position and allows the payer to gain the higher ground, stating "we think your product falls short...so let's now talk about price." In the new payer environment, providing the clinical data that payers are asking for, such as showing clinical superiority in a head-to-head trial, or developing molecularly targeted drugs that identify for treatment only those patients most likely to respond, isn't producing the expected response. This is because the payer is so focused on cost relative to any clinical value. I have heard it said that the only thing a payer dislikes more than a product without good data is a product with good data. Understanding this perception is a first step in defining what motivates payers in a price controlled market. Their benefit assessments seem to stray from the consensus in the medical community and any request by companies for even a small price premium over comparator products—based on data demonstrating significant statistical superiority over those comparators—will likely lead to prolonged negotiations. This challenge is further compounded when the comparators are generics. In some cases, payers are now settling limits on how much they will pay, per patient, per year. To remedy this, there is going to have to be some give on both sides, but unless society is satisfied with only having the treatments of today, more alignment must be made on the incentives to advance medicines ability to improve population health.

Parks: Industry still has some leverage in that we can decide where we choose to launch—or not launch. As some of the emerging markets become bigger over the next five to 10 years, there will be more options to pursue a launch strategy beyond the budget-constrained countries. I believe the biggest threat is the erosion of support for so-called incremental innovations. These are the products with clinical attributes that are quite meaningful to patients and whose success has always fueled the next round of first-in-class breakthroughs. These products are in wide disfavor now, with some companies reconsidering plans to advance next generation therapies.

Managing many parts

Looney: Market access is still a relatively new function within Big Pharma. What are the key elements of a successful market access program, from both a strategic and operational perspective?

Parks: By definition, market access is a cross-functional activity. It requires pooled expertise from clinical development, commercial affairs, and professional relations, among other functions. Most important, it must carry forward a global perspective that incorporates a detailed awareness of conditions in individual target countries. What really distinguishes a successful program is the capacity to communicate and engage with stakeholders who can build out messages that promote the value of the product. The point is to create a groundswell of support for a new product, ensuring that key players like the patient community are aware of its benefits and how it can help them.

Stefanacci: Market access is not a project that should be launched at the 11th hour. Everyone knows that, but still most companies come to the table too late. It is amazing as a payer representative to see companies visit us for the first time when they are well into the Phase III trial process. At that point, it is too late for our viewpoint to have much impact on the value proposition. We wonder why we are being consulted.

Barnett: Our work indicates a key differentiating factor for successful companies is that senior management truly "gets it." They have a strong understanding of payers and market access. These executives ensure the realities of payer and market access dynamics are reflected in commercial processes and the way their companies conduct business with payers. It all has to tie together from a clinical and marketing perspective, leading ultimately to a strong value message that differentiates the product and justifies the price point.

It's a race car: but who's driving?

McLellan: Market access is not really a function; it's a goal. We all know the goal must be defined early on in the process. The challenge is that even when the goal is agreed, the incentives of the internal players are often very different. Clinical development people are vital, yet their organizational mandate is to maximize the number of molecules that make it to registration. It is hard to get them to think beyond that marker of success. The elusive target here is integration of the market access strategy. Yet you will find many companies are still working within a model of over-specialization around small parts of the process. It is like designing a race car, where one expert pushes the accelerator, another applies the brakes, and still another turns the steering wheel. This race car is unlikely to reach its goal anytime soon and more likely will crash into a wall. Expertise in pricing, reimbursement, outcomes research, real-world data, and other relevant functions sit on the same team, with the same reporting lines and priorities. Pfizer is now working toward such an integrated model.

Clinton: This approach can have a damaging effect because it leaves the impression that the essential objective in market access—a strong value proposition and access of technology to patients who need it—are some other function's problem. In reality, every part of the development and commercial process should be asking the question: What is the value of this drug to patients who have the disease and how can we improve on that?

Shah: I would call market access both a business function and an enterprise capability platform, spanning many activities. The objective is to ensure that as an enterprise we create value during the entire product lifecycle, starting with early phase drug development, and compete across the full continuum of healthcare, not just the pharmaceutical benefit in isolation. The value proposition is going to fail if it is confined only to the pharmacy benefit "silo."

Sharma: Every market access leader should have two major strengths. The first is the ability to think like a lawyer on the bench—you must know the rules, inside and out, and methodically define what the options are. The second is putting all the disconnected strands of activity together into a set of arguments that will deliver results, and be communicated in a way that stakeholders can understand. Another aspect of this role is how important it can be to avoid the conventional wisdom. The best practitioners in this field are those with the ability to think outside the box—because in market access, there is no box.

Success seeds from the top

Bertsch: People who do market access tend to be mid-level executives. There is much less expertise and awareness the further up you go in the chain of command. The absence of people with real clout can make it harder to compel others to collaborate.

Looney: What options exist to address these challenges? Might opening your doors to payers raise the level of engagement internally?

McLellan: In the United States, we can talk with the payers and have a fairly open exchange of views, including with people at the top of the decision chain. Outside the United States, this kind of dialogue is difficult, often for cultural reasons. The only way to really understand the payer environment is to sit across the negotiation table with payers in a price control country. It is unfortunate that few in the organization will ever get that chance.

Shah: Successful market access programs make a commitment to cross-organization pollination of talent to codify the market access mindset throughout (e.g., through rotational assignments for promising staff in related areas). For example, managers who are designated "fast track" for advancement must include a stint on market access work in their career development and progression plan. Obviously, this will take time for us to see a CEO with day-to-day exposure to payers in his resume. Contact with payers has not been rewarded among those who follow the traditional routes to the "c suite."

Looney: What about the patient perspective? Is it firmly embedded in the market access mindset of your companies?

Stefanacci: Some of the larger patient advocacy groups are increasingly active partners of the industry in early- and mid-stage drug development. These groups are actually funding some of this work, so as a result patients are signaling their value proposition right at the very start. This assures their voice in the treatment development process.

McLellan: We say that the work we do must benefit the patient. Nevertheless, patients factor too infrequently into a decision to reimburse a new drug. Patients—and their families—have a clear stake in our efforts to develop new treatments. They want to see and understand our data. If the data shows an advance in the standard of care, patient groups are likely to become a factor in the payer decision to budget for a new drug or to speak out when a benefit assessment decision lacks a strong medical rationale.

Sharma: To achieve that objective, industry has to move beyond the intellectual level and engage on the basis of a direct, emotional connection with the patient. This is a tactic that industry handles relatively well on the promotional side. But we are less proactive in making that real-world connection to the patient when it comes to negotiating a price or a position on the formulary.

Defining the best in Market Access

Looney: Can we come to a consensus on what factors are likely to determine success in an era that we all agree is going to pose more challenges to market access?

Parks: One issue facing the industry is the gap between patients with drug coverage and those without it. There is a real ethical divide. Some patients will get the cutting edge therapies that can cure or extend life; others may not and suffer the consequences. What if society no longer supports the incremental innovations required to fund the next generation of breakthroughs? We can say that industry's task is simply to develop medicines that pay for research and deliver returns to shareholders. But some very powerful forces in society don't see it this way. Resolving this is going to require some difficult conversations. One cannot be confident that the politicians will step up to lead in building a new consensus on P&R. What I fear more is the "kick the can down the road" mindset that gives industry little clarity in managing all this uncertainty.

Shah: We must press for a better definition of what constitutes value in pharmaceuticals. The dialogue must shift from cost to value. If a product shows it has value, then intrinsically the cost is aligned with the definition of benefits and outcomes desired, which is what value is. A good start toward moving the debate away from being exclusively about cost is contesting the idea that an incremental advance has no value. Drugs carry a high variability in the individual response, which shows how important having a choice of therapy is when a clinician treats a patient.

Clinton: The days of approaching market access and cost cutting with an "Us vs. Them" philosophy are numbered. We need to focus the discussion on how to help the patient with his disease instead of a limited focus on what happens when he receives our drug. If we can think through the entire disease from diagnosis through resolution, we can identify other, creative ways to optimize outcomes and control costs.

Bertsch: There is a contradiction at the heart of market access that poses more difficulty in the years ahead. While everyone lauds the idea of closer partnerships with payers, no one wants to assume any risk in that relationship. Contracting deals are a good example. Payers demand a payback when outcome goals are not achieved, while manufacturers fret that performance metrics are unrealistic because the data on their product is flawed or unavailable. So both sides hesitate because there is too much risk.

Shah: Data is reflective of a fragmented delivery system. It cannot demonstrate cross-sector impacts because the process by which that data is generated, managed, and accessed is siloed. Our greatest contribution to value, which is how the drugs budget impacts the cost of healthcare overall, is virtually impossible to prove with the data we can compile today.

Smeeding: This is a bit of an exaggeration. I have been fortunate to work with a specialized employer database whose model is integrated across the full range of health services and encompasses a relatively stable survey population tracked over a long period of time. We have been able to draw out some very interesting data that links pharmaceutical access to health outcomes.

Clinton: My challenge is whether our market access capabilities are able to address the complexity of the new insurance models that are part of health reform. The industry is well prepared to assist patients without insurance through direct patient assistance programs. There is less guidance for us on how to assist people who are under-insured, with minimal coverage but are not indigent. Under the new reform law, I suspect we will see large numbers of people who opt for less than adequate coverage, with high deductibles and co-pays for drugs. We will face an interesting situation—more insured people who will be seeking sources to help pay for their medicines.

Coupons conflict

Looney: A source of tension between payers and manufacturers today is the latter's use of co-pay offsets and discount coupons to maintain brand loyalty and discourage patients from switching to the lower cost generics mandated by provider formulary programs. How is this debate likely to shake out, particularly as the pool of insured patients grows with implementation of the individual mandate under the Affordable Care Act?

Stefanacci: The consensus among payers—including the Center for Medicare and Medicaid Services [CMS], where I served as Health Policy Scholar—is that these offsets have a distortive effect on the effort to manage drug utilization. It contravenes the spirit of the Medicare Part D drug benefit, where the so-called "doughnut hole" was introduced to ensure patients are motivated to choose the lowest-cost generic option to avoid full liability for the cost of higher priced branded medications. Payers prefer that companies support patient assistance programs [PAP] that don't circumvent their utilization management protocols.

Smeeding: Co-pay offsets and discount cards exist because of the tiering of formulary access. Manufacturers want to defend brand share and argue that these incentives reduce costs to patients and thus promote better adherence and fewer hospital stays. Payers say in return they have made very careful assessments that some products are preferred to others; on efficiency grounds, their covered population should adhere to that judgment and not be influenced by outsiders with a vested interest in promoting an alternative. Both parties are defensive and are reluctant to put their case directly to the public. And a growing volume of data indicates that co-pays in general are a disincentive to adherence, can lead to poor health choices, and thus don't make much sense economically.

Stefanacci: This presents a tough balancing act for payers. They realize that patients are primarily driven into plans by the premium; in fact, rich benefits typically attract high utilizers. So one balancing act is between premiums and benefits. Another is between patient out-of-pocket charges and outcomes. While high out-of-pocket reduces a plan's Rx expenses, it could actually cost a plan in poorer health outcomes, tipping the balance. We will see how plans fare in accommodating these conflicting forces.

Finding common ground

Looney: Can you identify areas where payers are making constructive contributions to the dialogue that all sides seem to want?

Smeeding: We are seeing increased alignment of incentives between manufacturers and payers, resulting in coordinated management of pharmacy benefits. And adherence is finally being taken seriously by both parties, with much productive work taking place in the neglected specialty segment. Data is being shared for use in specific applications linked to outcomes. For example, there is exciting work underway in Medicare on medication therapy management where reimbursement will be based on star ratings covering how well you are following patients after treatment and avoiding adverse events linked to the inappropriate use of drugs. This is encouraging the development of patient registries, where payers and drug firms can both contribute to the generation of real-world data that leads to savings system-wide.

Clinton: United Healthcare and Aetna are conducting numerous pilot experiments with the industry focused on oncology medicines. They do not put price at the center of the discussion but instead consider how to eliminate inappropriate financial barriers to positive patient outcomes.

Parks: Data is not always pristine. There is a difference between the careful, well-controlled population of a clinical trial monitored by regulators and the observational data taken from clinical settings and patient registries. Once a drug gets used in the real world, the "confounders" on data rise exponentially. These are difficult to scrub to obtain a clean result. We'd like more support from payers and regulators in finding ways to reconcile the confounders and get at least some semblance of a pure data set—one that is useful for decision-making.

Looney: Any final comments about the pace of change affecting market access?

Stefanacci: The US healthcare system is facing a revolutionary shift away from employer-based insurance. We will see movement toward the new Health Insurance Marketplace [HIM] exchanges, led by a gradual mass exodus from employer-sponsored plans. The Obama Administration has actually given a boost to this trend by delaying the penalty on employers for not providing coverage. The other shift is in care delivery, specifically where physicians like myself practice. This is different than the physician hospital organization model of the 1990s that failed, forcing physicians back into private practice. Physicians today are accepting these new care models as they tend to be more comfortable with being salaried, committed to normal work hours, and handing the administrative burdens over to someone else. This new "organized customer" is here to stay. With the shift of physicians toward these new care delivery models, treatment decisions will be decided not by physician "pull through" but instead in the "c suites" of these new provider groups. Decisions on drugs are no longer in the hands of the physician. Access determinations will be made at a much higher level, based on the delivery of outcomes that these new provider groups are being held accountable for.

Parks: Information is equally transformative. Apple recently unveiled a new digital product it calls Life Tracker that is primarily designed for athletes interested in evaluating their training progress. But imagine how payers could use this technology to follow the routine lifestyles of their insured populations and make coverage and treatment assessments around that data. Whoever can find commercially advantageous uses from this rising tide of information technology will get to the top of the market first. Just think of what this data retrieval could mean for managing Type 2 diabetes.

William Looney is Pharma Exec's Editor-in-Chief. He can be reached at wlooney@advanstar.com

Author's Note: Statements attributed to participants in this roundtable do not necessarily represent the official views or positions of their affiliated companies.