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  • Writer's pictureSAKS Market Access Team

Four Things That Are Keeping Payers Up at Night Right Now

Based on our own qualitative primary research conducted with payers, we have an idea on the four things keeping them up at night.

Earlier this month, the Centers for Medicare and Medicaid Services, CMS, started price negotiations with manufacturers of the first 10 drugs targeted by the Inflation Reduction Act. Meanwhile, executives from 3 pharmaceuticals appeared before a Senate committee to answer questions about the high costs of their products. 

These events remind us of the pressures that formulary decision makers are under as they evaluate new therapies and try to make coverage decisions in the best interests of their members—and their business. And, based on our own qualitative primary research conducted with payers over the past year, we have an idea of how they may respond to change. 

This year we’re keeping our eye on four things in particular:

1. GLP-1 use in weight loss. Payers are struggling with how to manage the GLP-1 agonist class in weight loss. In an enormous population (no pun intended), how do you ensure you are paying for real health benefits rather than wasting resources on cosmetic ones? A CMS national coverage determination has prevented coverage for weight loss drugs for years, but current restrictions on GLP-1s are complicated by coverage of the often overlapping condition of type 2 diabetes, and by mandates for coverage in certain states. 

Following this year’s presidential election, payers anticipate a revision to the CMS policy that will open up the coverage conversation with GLP-1 manufacturers. Much will depend on emerging data demonstrating that GLP-1 weight loss translates to reduced risk of cardiovascular events and other areas of real payer, plan sponsor, and patient concern.

2. High-cost therapies. Rare disease therapies and how to manage them will be an issue. Cell and gene therapies (CGTs) with multi-million-dollar price tags, such as Hemgenix for hemophilia B, are the most concerning, but multiple small molecules and biologics for rare diseases are also highly troubling, especially for smaller plans where having 1 or 2 members on therapy can be crippling. 

Historically, payers have felt they must provide access for rare disease therapies almost regardless of price, but this mindset appears to be changing. Though rare disease treatment discounts aren’t prevalent historically, the increase in number of therapies, as well as price, will drive payers to force manufacturers to offer increased discounts under the threat of non-coverage. Manufacturers may begin to see formulary exclusions—or management so restrictive that the drug might as well be excluded—if they are unable to either discount or demonstrate significant value. 

A more radical approach would be to carve out a separate benefit for rare disease therapies—something that’s also being looked at for CGTs and, for other reasons, for the new wave of GLP-1 approvals for weight loss. 

3. Patient advocacy organizations, especially in rare diseases. While manufacturers need to be highly skilled communicators to influence access decisions, patient advocacy organizations (PAOs) have an easier time of it. PAOs are seen by patients as crucial advocates and spokespersons, and they are seen by payers as a valuable connection to their members’ point of view. This especially comes into play when determining coverage policy for drugs approved based on surrogate endpoints. As more high-cost orphan drugs come under review, more rare disease PAOs exert pressure on high-impact coverage decisions, leading to more sleepless nights for formulary decision-makers.

4. IRA pressures. In discussions with more than 60 US Payers in the last two quarters, the customers told us they expect manufacturers to set launch prices higher in expectation of greater regulatory controls on increases down the line. While we’re not aware of past manufacturer passivity around pricing in the past, we do expect efforts from all parties to extract more from the Medical benefit to offset anticipated controls in the Pharmacy benefit, whether that comes in the form of higher prices from manufacturers, higher cost-sharing for members, or both. The impact of industry-led legal challenges to the IRA as well as the pending presidential election create additional uncertainty for payers.

Setting the right price for a new therapy—one that both reflects the true value of a drug and is acceptable to payers—is the most important decision a brand manager can make. And our research suggests that pricing strategy is more challenging today than ever before. 

SAKS Health helps brands and commercial leaders think through these questions, then focuses on communicating product value to payers and other healthcare stakeholders effectively. Because to our way of thinking, establishing access is a prerequisite to the ultimate goal, Better Healthcare Tomorrow™.



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