Trade & Channel Strategies 2024: Access and Channel 2024 Year-in-Review and Preview of 2025

Image Credit: Nicholas Saraceno

This year’s Trade & Channel Strategies Conference in Philadelphia kicked off with a keynote address from Bill Roth, SVP of IntegriChain’s consulting business, Blue Fin Group, and Pharma Commerce board member. Titled “Access and Channel 2024 Year-in-Review and Preview of 2025”, Roth discussed the current reimbursement landscape, how the evolving site-of-care trends are shaping patient access and channel dynamics, and the influence of cost of goods on channel strategies and profitability.

Roth commented that in the past year, consulting companies in the industry have experienced a big hit when it comes to revenue.

“All of our businesses were down 20% to 25%, and we had no idea why,” he explained. “We thought that maybe it was the IRA, and manufacturers were starting to figure things out, and that is exactly what they were doing. But all the puzzles went higher in the organization. They got pulled from trade and access and patient services. For the first time in their careers, chief commercial officers had to figure out how it all fits together.”

Roth also spoke about a number of key challenges moving forward, which included navigating the complexities of payer systems. Currently, coverage won’t guarantee patient access, demonstrating that there are inefficiencies in the reimbursement process.

“Even with all the generics coming to market, they deflate to about 5% of the reference product within 12 to 18 months,” Roth explained. “The authorized generics are actually doing pretty well, but brands continue to inflate, so now both the PBM and the wholesale are running a model where they tell a pharmacy that they need to have an 85% brand to 15% generic ratio on the dollar in order for the prices to stay this way. With the pressure coming down on generics, a simple 5% compounded annual growth rate on brands, and pretty much everything launching in general medicine, the problem is going to continue getting bigger and bigger.”

Roth also explained that reimbursement dynamics are drastically changing, as drugs face declining margins with increasingly aggressive rebates and cost-reducing policies. He stated that launching in a generic-dominated space often requires a 60% rebate just to secure market access, leaving slim margins for manufacturers. To combat the issue, some pharma companies are in the process of exploring alternative approaches, such as direct-to-patient models or leveraging digital pharmacies to bypass traditional payers.

“The game is changing, so retail is obviously changing as well,” he said. “What does that mean for distribution? It’s untenable that the manufacturers are paying that 10% to 15%. You’re going to level your channel so far that you’re pushing your envelope to see what other alternatives are feasible.”

Roth then mentioned that national pharmacy chains are buying brands at a one and a half percent premium to independence and retail and regionals.

“That’s why Walgreens and CVS have been banging on your doors so much in the past year,” he said. “This is because the companies are hemorrhaging. The bundle and the cost less models are not working. The pharmacies are just as discontent as the manufactures are, and that’s a recipe for change. It’s not going to change overnight, but it’s going to go drug by drug. I like to characterize it as death by 1,000 paper cuts. From here, pricing and policy must be integrated into early strategic decision-making. Finance and government pricing teams need involvement upfront to avoid reactive adjustments.”