Access Insights 2024: Playing the Chess Endgame
A panel dives into the current and future outlook of healthcare policies.
One could make the argument that the Access Insights Conference is right where it’s supposed to be, being that it took place in our nation’s capital, Washington, DC.
Stephen Morales, senior principal with Blue Fin Group, moderated a panel that was centered around “Playing the Chess Endgame–Healthcare Policies Targeting Drug Commercialization,” and was joined by William Sarraille, a professor at the University of Maryland Francis King Carey School of Law; Alice Valder Curran, partner at Hogan Lovells; Meenakshi Datta, partner with Sidley Austin; and Albert Thigpen, co-founder of Talentwise Consulting.1
The goal amongst this group of subject matter experts was to uncover the current and future directions in Washington when it comes to approaching healthcare policies. This included a dive into the Inflation Reduction Act (IRA), the average manufacturer price (AMP) cap removal on Medicaid drugs, 340B updates, potential executive action on pharmacy benefit managers (PBMs), 340B updates, and plenty more. What in fact is the federal government’s endgame in all of this when it comes to pricing and commercialization?
The economic effects of the IRA
For Sarraille, who jokingly called himself the “world’s greatest pessimist,” he noted that the IRA, by extension, makes PBMs much more financially responsible for the Part D program than government, which directly impacts patients.
“There's been a real shift in relative responsibility, and I think that that has a lot of impacts, not many of them, but from a patient perspective,” he said. “ … Unfortunately, patients are really unprepared for the barriers that they're likely to face very quickly. The bad news doesn't really end there. It's certainly true that if you were one of those patients with out-of-pocket cost of more than $2,000 before, you could be a big winner here, relatively speaking; with the imposition of the cap a few years ago, maybe we're spending $7,000, $8,000. Now being capped at $2,000 is terrific. I think if you were a patient below $2,000, that probably means you're going to be inching up towards $2,000, but every winner, there are unfortunately maybe two or three losers.
“From that perspective, smoothing is presented as a way of perhaps taking edge off of some of that, but it seems pretty clear that the plans are not necessarily highly motivated to educate that smoothing option. It seems a little suspect as to how much relief will come from that negotiated price when we get there. In terms of implementation, it seems to be an absolute disaster that they're making, perhaps at least in the first several months.”
In other words, manufacturers feel as though they are just being told to figure it out. From a macro perspective, they’ve actually been asking questions about creative ways to problem solve.
“This mindset of ‘no one's done that, so we can't do it’ is out the window. I just think to the extent that you are being charged when your business leaders to be creative, the reason you are is because of the gross-to-net pressure that's just getting worse, not better,” said Valder Curran. “Whether it is manufacturers opting out of Medicaid to 340B, creating small corporations that they can park products in it that don't need to be in Medicaid or Part B and under the recent Medicaid rule—and not trying to put all manufacturers under what umbrella— that makes it a little bit easier, but we see that we never used to think people would ever lower WACs [wholesale acquisition costs]. We now see companies lower WACs. We see pressure clearly around 340B, and being more aggressive in ways that manufacturers used to be.”
To Datta, proper planning is necessary in order to get a bigger picture.
“Mapping is going to be very important here. Each move needs to be charted out simultaneously, and then taking a look to see the compounding factors of each and what's going to be happening with the plans. The BPD [brand prescription durg] premiums are going to go up. We know that there is a pumping of the brakes on a portion of that premiums going up, but it's not the whole premium. It’s anticipated that premiums will rise by as much as 50%, in the coming few years, so it's not too far away. What does that mean for Medicare Part D beneficiaries?
“You’ve got the out-of-pocket cap, but being able to afford the premium in the first place may become a bigger problem for patients. Related to that, the access point is going to impact revenue. … What about outright inappropriate denials of coverage where the patient should be covered pursuant to the terms of an arrangement that you have with the payer and PBM, but a denial occurs, and it's part of a strategy to slow walk that patient's access to the prescription? Those things are happening now.”
Changes to the PBM model
In order to set the scene, Thigpen provided the audience with context as to how PBMs have responded historically, what they will do going forward, and how they're thinking about it.
“During Bill Roth’s keynote, he had the timeline of what happened historically versus where we’re at today. I was running through my head of all the PBM changes that occurred at the same time, outside of some of the legal ramifications that occurred. We're coming up now on almost 20 years of full implementation of Medicare Part D—2006 was the first year it was enacted. When I was at CVS Caremark at the time, we had no clue whether we were going be successful or not. Ever since then, the models have changed every year because of how the rules are promulgated and then enforced year after year, with open comment periods back and forth. I fully suspect it's going to be a pretty big disservice when it happens after this first year, but look at what the PBMs had done.
“First off, at the very onset of Medicare Part D, you were allowed to spread the network, and then, by law, they end up going away, and the government says, ‘I'm taking all that money back because you have to report to the government how much you're actually making in your program.’ Once the government gets wind of how much you were making, they said, ‘that's mine. I'm taking that back.’ Then the PBMs said, ‘Well, how am I going financially viable?’ We saw, stand-alone PDPs [prescription drug plans] collapse and get out of the market early on, because they weren't financially viable. We're seeing a lot of that now, with less PDPs in the market than when the program was recently started. And then the PBMs got creative and say that maybe we'll invent a new pricing economic; there are other avenues that the PBM industries and the payers have done really aggressive work on maintaining profitability in the channel. I feel that I wanted to tell you that as a context, because they're creative, and they'll find another way to continue to monetize the claim.”
A future landscape
In regard to a future outlook and the need for early value analysis, Valder Curran highlightedthe need for companies to be prepared for commercialization and the importance of having a good value story for products.
She also noted that value in developing data to support cost effectiveness and breakthrough therapy status, along with the role of the No Patient Left Behind organization in promoting a holistic approach to defining product value.
Reference
1. Playing the Chess Endgame–Healthcare Policies Targeting Drug Commercialization. October 14, 2024. Access Insights Conference, Washington, DC.
