Adapt Agreement and Payment Structures to Identified Risks

It’s that time of year where we’re busy heading into the final quarter of the year. In 2018, we have witnessed a fundamental change in the concept of value, going far beyond pharmacological properties and clinical effects, to not only to include patient value, quality of life and patient management, but also to integrate systems and societal value dimensions more broadly.Where are we in our journey towards the new frontier in the ‘paying for value’ discussion in the US?

Stage 3 Adapt Agreement and Payment Structures to Identified Risks

When drafting the terms of the agreement, multiple considerations are required from a legal, operational, and strategic risk management perspective. The set of legal ambiguities encountered within different countries, and especially in the US (e.g., anti-kickback laws, Medicaid’s “best-price” rule, 340B ceiling price, among others) are certainly challenging but can still be navigated as we have argued in the second part of this report. It is important to also note that many of the operational concerns are second-order challenges, meaning that our willingness to dedicate time and significant resources to address them should be predicated upon the likelihood of success, based on the best estimates of performance under real world conditions. No matter how well we navigate the legal and operational hurdles in the implementation, an OBA that fails to deliver due to miscalculated real world performance is one that can and should be avoided. Thus, our core interest here is in advancing guidance as it relates to the question how to make an agreement perform in the first place. At the outset, it is important to look at the strategic risk management component, which should be the very core of the agreement. Many of the initial
agreements that have been negotiated aimed simply at guaranteeing the same performance in actual practice as was observed in the clinical trial, with partial or full refund when this performance is not reached. While this structure is convincingly simple, it might be inadequate from a risk management or a population health perspective.

For example, a common risk to which manufacturers are exposed with OBAs in chronic diseases is the so called channeling effect. In these conditions, early adoption of newly launched treatments tend to happen disproportionately among patients with more severe disease as they are the ones with the highest switch rates and because these are the ones for which physicians often have no alternative treatment. As a result, in the first year of launch of a new chronic treatment we can often expect to see a high share of severe patients receiving the new treatment (at a higher proportion than in the clinical trial and a higher proportion than other comparator treatments), which will likely decrease progressively over time as the adoption broadens. As observed outcomes tend to be poorer among more severe patients, manufacturers engaging in OBAs for chronic conditions such as multiple sclerosis or cardiovascular diseases face a risk to refund a significant share of their sales in the first years after launch. Anticipating this type of issue is critical to avoid disincentives for manufacturers and potentially provision the agreement to limit risk. For example, a simple cap on the percentage of total refund could be included in the agreements, or patients with specific characteristics could trigger lower refund amounts. Channeling is one among the various uncertainties and risk that need to be managed when embarking on an OBA.

Another interesting example of robust planning and risk management is provided by the two agreements between Amgen and Harvard Pilgrim for Repatha discussed in the previous section. The first agreement, signed in 2015, aimed at guaranteeing the same LDL control in the plan population witnessed in the clinical trial, while in the second agreement signed in 2017 Amgen rebates the cost of Repatha for patients with at least 6 months of treatment who experience a stroke- or MI-related hospitalization. Interestingly, both agreements comprised an exclusion clause of patients that would not meet a minimum level of adherence to treatment, considering that adherence to treatment is in many ways a factor that the health plans do have some ability to influence. This clause was particularly important to secure a fair agreement as one can expect adherence to a cardiovascular treatment to be lower under real world conditions than in the RCTs, which can be problematic as adherence typically has an impact on effectiveness. Hence, the provision in the contracts was appropriate, as the real world adherence is likely to negatively affect the observed real world effectiveness of Repatha but this represents a shortcoming of the health system and not necessarily of the treatment itself. Another possible approach could have been to further enrich the agreements by adding disease management programs that can enhance patient adherence (cf. section 6). Finally, two other interesting features of these agreements are that the first one also included a traditional clause of rebate on volume and the second one includes a refund of out-of-pocket costs. These show that hybrids of financially based and outcomes-based agreements are possible and perhaps prominent, and that the value of the outcomes based agreements can go not only to the payers, but also reach the patients.

In conclusion, whether your OBA is set up as a population-level or patient-level agreement, modeling the expected outcome in the health plan population is a critical step to identify key uncertainties and to develop a robust sales forecast that can guide decisions regarding the contract, such as timing and target level of the outcome, as well as potential provisions regarding specific use of patient population factors. For more on this stage of the contracting process, please have a look at this guided seminar on the gross-to-net implications of prediction-driven outcomes-based agreements here:

Meet Our Experts

Ulrich Neumann
Ulrich NeumannSr. Director & Head of US Value & Access
Ulrich Neumann is the Senior Commercial Director of Analytica Laser, a global research consultancy with offices in eight countries. In addition to client advisory in US-based market access, his responsibilities include corporate affairs, marketing, product development and customer-facing growth strategies across all of the company’s target markets. Analytica is part of Certara, the global leader in model-informed drug development with over 700 professionals in 20+ countries.

With a dual background in business management and public administration, Ulrich focuses his work as a pharmaceutical market access expert on reimbursement and pricing, as well as activities on the US political, legislative and regulatory landscape to assess policy drivers, enablers and challenges to market access. He has given conference keynotes and university seminars, published research in whitepapers and articles in the pharmaceutical press, as well as two books in the field of media and terrorism policy.

His business experience lies in defining product strategy, value messaging and brand development. The founder of several ventures, Ulrich has worked on go-to-market projects for close to 15 years and most recently ran the US division of a respected global provider of pharma market insights, b2b networking and conferences. Ulrich is a graduate of the London School of Economics (MSc), University of Southern California (MA), University Twente (BSc) and University of Muenster (BA). At USC, he held the Roger Silverstone Fellowship, the Annenberg School’s highest-sponsored grant, conducting quantitative and qualitative research on the economics of digital platform markets, competitive strategy as well as marketing and communications strategies. Active in the NY health tech community, Ulrich is a supporter of the open health data movement and member of ISPOR and DIA. He is a nominated Fellow of the Royal Society of Arts and Commerce since 2014.

Isha Bangia
Isha BangiaUS Access Specialist
Isha brings a combination of clinical and strategic experience to Analytica. She holds a PharmD from Rutgers University and an MBA from Johns Hopkins. Her background as a pharmacist provides clinical perspective into retail and hospital settings where she has been involved in market access and clinical care at the provider level. Her managed care expertise includes work at Hunterdon Medical Center, Bayshore Community Hospital, Princeton Houser Psychiatry, Hackensack University Medical Center, Bayonne Medical Center. Isha has also participated in P&T committee meetings for formulary decisions. Prior to joining Analytica, Isha was a consultant at Prescient Healthcare Group, focused on competitive landscaping and go-to-market strategies. She has past experience from Zitter Health Insights where her work focused on payer primary and secondary market research to better understand market access barriers (e.g. step therapies and prior authorizations) for manufacturers. She has worked across multiple therapeutic areas including oncology, biosimilars, diabetes, vaccines and rare diseases.

Roman Casciano
Roman CascianoGeneral Manager of Analytica Laser & SVP, Market Access, HEOR and Real-world Evidence, Certara
Roman Casciano is the General Manager of Analytica Laser, leading Certara’s Market Access, HEOR and Real-world Evidence Group in the capacity of Senior Vice President. Based in New York City, Roman’s role comprises the executive management of all strategic and scientific teams across the company’s eight offices and three divisions. Roman continues to actively participate in client engagements as a market access strategist, ensuring that customers can leverage all of the benefits of our multidisciplinary team and integrated offer.

Roman was one of the founding members of the Analytica Group in 1997 and remained with the company for over 14 years, serving in various capacities during his tenure ultimately serving as President from 2008 onwards. Prior to joining Analytica, Roman worked for 4 years as an environmental engineering consultant with HDR Engineering Inc. in White Plains, NY. Roman went on to participate in the founding of the Analytica Group in 1997, initially serving as Director of Operations and subsequently serving as General Manager for the German subsidiary from 2004-2006. After returning to the US from his tenure as General Manager in the German subsidiary and prior to taking on his role as President of Analytica, Roman worked for 2 years in Analytica’s previous parent company, Accentia Biopharmaceuticals as the Sr Vice President and head of the NY-based product development team with full responsibility for the conduct of its two on-going phase III clinical programs.

As an applied health economist and market access strategist, Roman has personally led hundreds of engagements in the international market access and HEOR context related to product value demonstration and has deep experience in the management of multidisciplinary teams of scientific and strategic consultants across continents. Roman’s experience ranges from analytical activities such as economic modelling and database studies, to strategic activities such as developing product pricing and market access plans and communicating evidence internally and externally for our customers. Roman has experience across the product lifecycle, including assessment of early phase assets, licensing due diligence, and go/no-go decision-making support, as well as launch planning and commercialization activities.

Roman received both a Bachelor of Science degree in Mechanical and Aerospace Engineering and a Master of Engineering Degree in Mechanical Engineering and Engineering Decision Making from Cornell University.

Lee Stern
Lee Stern Global Vice President, Business Development
Lee Stern is a Vice President at ANALYTICA LASER, formerly Senior Vice President of Analytica International. In this role, she is responsible for all health economic and market access engagements for global clients. She also oversees the full operations of the New York office. Lee is a strategic and actionable leader managing highly qualified and scientifically robust cross-functional and geographically disparate teams.

Her expertise in solving client issues via action-oriented deliverables is a strong asset in the context of a cost conscious payer environment. She has extensive experience in global market access and launching products in competitive landscapes. As a strong operations leader, Lee is able to deploy a team of specialized scientists to ensure timely, relevant and scientifically robust deliverables for her clients. Her 10+ years of experience in the industry enables her to draw upon a vast repertoire of project deliverables to produce solutions for complex study designs and market access issues. For example, she has coordinated multiple local country submissions for major oncology products, managed international payer research in diabetes, and published numerous retrospective data analyses, models and literature review studies in peer-reviewed journals.

Prior to joining ANALYTICA LASER, Lee served as the primary nutritionist in a large physician practice, closely affiliated with NYU Langone Medical Center where she has maintained close ties.

Lee received her Bachelor of Arts degree in Neuroscience at The University of Pennsylvania. She also completed her Masters in Clinical Nutrition at New York University School of Education.

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