Strategic Pharma Considerations

It’s that time of year where we’re in 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?

Strategic Pharma Considerations

Based on our experience, developers of pharmaceutical products are motivated by a variety of business objectives to pursue OBA (Figure 13). The exact rationale varies by product and particular business case, but factors generally include the opportunity to ensure greater patient access to new medications (and potentially mitigate the impact of tiered formulary placement) and the attempt to demonstrate the full clinical and financial value of products in the marketplace, so as to ultimately increase market share in crowded therapeutic classes for instance. For brand teams, the ability to improve prescriber confidence in the products is certainly an upshot of well-executed OBA contracts we witnessed. Payers see it as a benefit to be able to give physician and members choices in medication selection.

Pharma strategy goes beyond product specific advantages. Deep relationship building, as described by Harvard Pilgrim’s Dr. Sherman above, is understood to be a natural consequence of the concerted payer-pharma engagement, even in cases that may not ultimately lead to a contract in the market. Executives at pioneering companies would add that the early investment in the OBA approach has already resulted in economies-of-scale for later contracts, in terms of both useful learnings and building infrastructure to reduce future time and resource needs during negotiation and execution. One of our clients, a leader with more than a dozen agreements in the market, was able to report an efficiency factor of 90%, meaning resource needs shrunk to 10% of what they had been for an early benchmark pilot. Such remarkable efficiency gains are driven by growing cross-functional expertise, the setup of analytics platforms and use of guiding frameworks, templates and best practices. We refer to this as an OBA approach at scale.

Strategic Payer Considerations

From the health plan perspective, a core promise of an OBA is to provide members with access while reducing risks around budgetary uncertainty: The list of available innovative therapies can be expanded while patients with the greatest need are prioritized, generating positive reception by consumers, media and patient associations alike. In reality, OBAs are only one of many value initiatives and US payers spend the vast sum of time and resources on provider-driven value-based models, network optimization, integration and consolidation. However, increases in the cost of specialty medications have sharpened payer rhetoric around OBA. Interestingly, most of the payer executives we spoke with are not outright dismissive of the overall costs of high-value pharmaceuticals but point to misgivings about paying premium prices for treatments that turn out to provide little value in real world use. Looking forward, those budget holders have concerns about specialty pharmacy utilization costs, but they are even more worried about the emergence of innovative combination therapies priced markedly above existing standard cost of care. They are open to better formulary placements and removal of utilization restrictions, but only if such will result in reduced drug spend for non-responders, optimized treatment durations and overall cost savings. This puts value-based contracting squarely into the payer toolkit for achieving value for money. We would argue that this actually represents an opportunity rather than a threat for manufacturers in view of the most likely counterfactual (considering measures to manage budgets payers tend to consider at their disposal such as drastic increases in rebate levels, potentially heavy utilization restrictions and unfavorable formulary placement or even list exclusions).

Historically, when payers began to create value for money analyses, their initial basis relied on the “known” aspects of the drug’s reported value proposition – that is, using data based on completely controlled populations, placebo controlled, double-blind research. The advent of real world evidence has changed the equation. For plans, the critical question becomes not only ‘What will it cost?’ but more importantly ‘Which members are most likely to respond, and when should we stop therapy when it becomes clear is it not working and what types of controls would be acceptable to accomplish this?’ To develop a meaningful value proposition in the construction of OBAs with respect to payer budgeting, manufacturers are well-advised to develop population based models that capture total medical costs (utilization, diagnostics, medical costs, hospital beds, and more) and show impact on quality and efficiency of care. Judicious use of diagnostic markers and advanced modeling can help to identify the right patients (for instance, those for whom the drug is most likely to work and those who are likely to be non responders). As we outline further in chapter III, resulting models around real world effectiveness must be brought to bear during OBA contract negotiations so that optimum clinical and financial outcomes for both payers and drug manufacturers can be achieved.

Payer representatives we spoke with would urge manufacturers aiming to enter OBA negotiations to develop strategies and evidence that supports actuarial and population-based decision-making and where possible go beyond product or even disease specific analyses. This is born out of the simple but compelling fact that health plans carry fiscal responsibility for “full” members (as opposed to patients of a certain therapeutic intervention only). Such perspectives are of course neither new nor exclusive to innovative contracting, but it can be advantageous to see OBAs and the intense collaborations that enable them as a unique vehicle to bridge divergent understandings. As one of our interviewees on the pharma side told us, “OBAs are the best investment in payer intelligence we currently have”. To understand OBAs as an exercise and opportunity in mutual trust building cannot be overemphasized.

Figure 14 shows how payers with existing OBAs see the benefits these have brought to their organization. The list synthesizes responses of the most recent US survey research but also reflects that at this stage, plans are still on a learning curve when it comes to outcomes-based contracting. Generally, payers have an eager interest to obtain real-life insights on disease management and treatment pathways, and active partnerships that include pharma responsibilities “beyond the pill” are welcome. Dissatisfaction with the contracting process mostly sets in when negotiations become lengthy and impenetrably complex, when talks get lost in contractual minutia and trust erodes as the other side is believed to show no ability to make any concessions.

We noticed that the use of clinical and actuarial analytics platforms is growing when it comes to the understanding (and definition) of meaningful endpoints and the range of factors that modify real world usage, including adherence, persistence, therapeutic selection bias – information payers expressly value.

Those drawing on outcomes-prediction technology report that internal analytics teams may end up in the contract design stage for up to six months. External expertise is often requested to accelerate the path to OBA launch.28

References

25 Goble, J. A., et al. (2017). Performance-Based Risk-Sharing Arrangements: U.S. Payer Experience. Journal of Managed Care & Specialty Pharmacy, 23(10), 1042-1052. doi:10.18553/jmcp.2017.23.10.104226 Avalere (2017); Survey of 50 decision makers representing 45 health plans and 183 million covered lives. Avalere Policy 360,Payer Perspectives on Outcomes-Based Contracting;
27 Brown, J. D., Sheer, R., Pasquale, M., Sudharshan, L., Axelsen, K., Subedi, P., . . . Kamal-Bahl, S. (2018). Payer and Pharmaceutical Manufacturer Considerations for Outcomes Based Agreements in the United States. Value in Health, 21(1), 33-40. doi:10.1016/j.jval.2017.07.009
28 IBM Watson Health/ Truven Health Analytics (2018). When do outcomes-based contracts make sense. The Payer Perspective. Opinion Brief. January 2018

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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2018-12-06T15:23:45+01:00