Drug Market Access Strategies in 2024: Key Considerations for Pharma Companies
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Insights & Articles
20.2.2024
The high-costs of newer drug treatments make the adoption of non-traditional, value-based drug purchasing arrangements a necessity for healthcare payers and administrators trying to manage their budgets, provide patients with quicker access to the most effective treatments, and reduce wasteful spending on treatments that don’t work. Recent regulatory changes and advanced AI contracting software options are making value-based drug pricing arrangements easier.
Even before the onset of the pandemic, annual budgets for public and private healthcare insurers were strained by the high and increasing costs of prescription drugs. Meanwhile, pharmaceutical manufacturers are bringing new and even more expensive drug treatments to market each year. According to Bloomberg, the median list price for a year’s supply of a new drug introduced to the U.S. market in 2021 was $180,007.
Thanks to COVID-19 vaccines and COVID-related treatments, pharmaceutical sales reached record levels in 2021. Sales in North America account for close to half of the total $7.3 billion global market revenue for that year. And since prescription drug prices are higher in the U.S. than anywhere else in the world, the increasing costs of drugs are a top concern for policy makers, healthcare payers, and consumers.
New, more expensive drug therapies are in development
A growing niche and focus for pharmaceutical companies is high-cost cell and gene therapy products. Market analysis by Grand View Research forecasts the global cell and gene therapy clinical trials market to reach a compound annual growth rate of close to 15% and an estimated market revenue of USD 24.5 billion by 2030.
While the U.S. Food and Drug Administration (FDA) has approved only a limited number of cell and gene therapies so far, expedited approvals of new drugs and favorable designations of new therapies as orphan drug or breakthrough therapies support increasing consumption of these new drug therapies in the U.S. market. The FDA predicts that by 2025, it will approve up to 20 cell and gene therapy products a year.
Healthcare payers and consumers feel the pain of higher drug prices
Even though payers are getting rebates and not paying drug manufacturers’ full list prices, they still have cause for concern as drug prices increase annually. Payers need to protect their annual budgets from outsized expenditures, especially for specialty drugs.
Both payers and patients suffer the effects of high and increasing drug prices. A study of 14.4 million pharmacy claims made from 2010 to 2016 revealed the median healthcare insurer payments for specialty medications rose by 116%; the median patient out-of-pocket costs increased by 85%. Drug list prices during the same 7-year period more than doubled, rising faster than inflation.
Drug manufacturers recognize the need for non-traditional, value-based payment arrangements
A new cell or gene therapy’s price tag may generate as much attention as the drug’s ability to treat disease. For example, one of the most expensive drug therapies in the world is Zolgensma, approved by the FDA in 2019. Novartis Gene Therapies (formerly AveXis) developed the drug to be a cure for around 500 infants born each year in the U.S. with spinal muscular atrophy (SMA). A full course of treatment is priced at $2.125 million.
Soon after Zolgensma received FDA approval, some of the top U.S. insurers quickly set up tight restrictions limiting coverage of the treatment. To help payers manage the impact of the cost and ensure patient access to Zolgensma, Novartis offers insurers the option of either a 5-year, pay-over-time contract or an outcome-based agreement.
The list price of Zyntelgo, the latest gene therapy to be approved by the FDA, surpassed Zolgensma as the world’s most expensive one-time drug therapy. Zyntelgo was developed by bluebird bio as a single-use treatment for an inherited blood disorder, beta thalassemia. According to bluebird, Zyntelgo’s price of $2.8 million is a good value when compared to the estimated $6.4 million worth of lifetime care costs for a patient living with beta thalassemia.
Estimates suggest that only around 850 patients in the U.S. will meet the criteria for treatment with Zyntelgo, and not all of those who are eligible will want the drug. Predictions of Zyntelgo’s annual sales revenue range from $64 million to $200 million.
The majority of patients eligible for Zyntelgo are covered by commercial health insurance, with most of the rest using Medicaid. Bluebird is offering payers a sizeable refund if the treatment underperforms or fails. If patients still need blood transfusions within two years after receiving Zyntelgo, bluebird will refund the payer up to 80% of the treatment’s costs.
Payers recognize the benefits of using value-based drug pricing agreements
Outcome-based agreements help payers address any uncertainty about the effectiveness of a new treatment, gain insight into a drug’s value to patient health outcomes, and reduce the risk of overpaying for a low-value treatment. The real-world evidence collected while managing value-based drug arrangements helps manufacturers justify their list price and reinforces refunds and rebates to the payer if the treatment doesn’t deliver results as expected. So why has there not been greater use of value-based drug agreements?
Regulatory barriers to value-based drug purchasing arrangements eliminated
This year, U.S. legislators have addressed most of the legislative hurdles that, in the past, hindered value-based drug purchasing arrangements. Policymakers updated two pieces of legislation to support increased adoption of value-based drug pricing agreements.
The Medicaid Best Price rule was changed in July, allowing pharmaceutical manufacturers taking part in Medicaid to report multiple best prices. This was followed by the passage of the the Inflation Reduction Act in August, which allows Medicare to negotiate directly with drug manufacturers over the prices of some of the most expensive drugs covered by the Medicare program.
Overcoming technological challenges to implementing value-based drug agreements
Another significant obstacle to increased adoption of value-based drug pricing arrangements has been the difficulty in operationalizing complex, data-driven, outcome-based contracts. These non-traditional agreements require a powerful, interoperable contracting software platform with extensive data collection and analysis capabilities to make real-world evidence both accessible and insightful.
To take on an outcome-based contract, an organization has two options. The first is to develop the IT framework in-house and devote management resources to monitor compliance and data security. This option is expensive, time-consuming, and beyond the current capabilities of many organizations.
The second option is to outsource the administrative burden of an outcome-based contract. In recent years, third-party vendors have developed comprehensive contracting software to bridge the gap and help manufacturers, payers, and providers transition from fee-for-service into value-based agreements.
The Lyfegen Solution
Lyfegen is an independent, global analytics company that offers a software-as-a-service platform for healthcare insurances, pharma, and medtech companies wanting to participate in value-based drug pricing agreements without making large investments in software upgrades. With extensive industry expertise and a vast library of resources, we can assess your current capabilities and advise and guide you through pre-implementation. Deployment of our customizable and scalable contracting platform is quick and integrates seamlessly into your existing workflow without compromising data security or compliance.
Lyfegen’s software platform includes three-fold functionality to implement value-based, data-driven agreements with greater efficiency and transparency: data ingestion, agreement execution, and insights generation. The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable information about drug performance and cost.
By enabling the shift away from volume-based and fee-for-service healthcare to value-based healthcare, Lyfegen increases access to healthcare treatments and their affordability.
To learn more about our services and the Lyfegen Platform, book a demo.
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The pharmaceutical industry and its drug market access strategies are continuing to evolve as we move through 2024, driven by mounting pricing pressures, aggressive regulatory shifts, and heightened payer demands. For pharma companies, refining market access strategies is no longer optional—it’s essential to securing rapid market entry and sustained patient access in an increasingly challenging environment. Let’s explore the key considerations for pharma companies within this space.
Evolving Drug Market Access Strategies
Pharmaceutical companies must adapt their drug market access strategies to address a rapidly evolving landscape shaped by policies and regulations across various regions, including the U.S. and Europe. New legislation, such as the Inflation Reduction Act (IRA), introduces more stringent reimbursement criteria, which could impact profitability and influence launch decisions for new drugs. To mitigate these challenges, companies need to prioritize earlier and broader data collection efforts, focusing on generating robust real-world evidence (RWE) and health economic outcomes research (HEOR). This comprehensive evidence base is essential for demonstrating the value of new therapies beyond the scope of traditional clinical trials, ultimately playing a critical role in payer negotiations and securing optimized reimbursement (NIH).
Global market variations also demand a tailored approach to launch strategies. In Europe, new regulations mandate shorter market exclusivity periods unless drugs are launched across all member states within two years, compelling pharma companies to align their launch timelines more closely with diverse national pricing schemes (European Parliament). Meanwhile, in markets like Japan, frequent price revisions are pushing companies to adopt dynamic pricing strategies to stay competitive.
The Role of Healthcare Technology Solutions in Market Access
With the industry pivoting towards value-based care and personalized treatments, healthcare technology solutions are essential in aligning stakeholder needs. Platforms like Lyfegen are pivotal in this shift. By offering a comprehensive Healthcare technology solution for outcome-based contracting, the Lyfegen platform supports the efficient implementation of value-based agreements between pharma companies, payers, and healthcare providers. Using platforms like Lyfegen means that the administration of complex pricing models can be simplified, patient outcomes can be tracked in real-time, and transparency can be increased, all of which are crucial for pharma to gain and maintain market access.
We continue to watch as the pharmaceutical industry is shaped by evolving regulations, mounting pricing pressures, and shifting payer demands. But to ensure market access, pharma companies must act now by building robust data portfolios early, integrating clinical trial data with real-world evidence (RWE), adapting to global pricing pressures, and leveraging digital solutions.
Lyfegen’s platform is at the forefront of helping pharma companies tackle these challenges. With Lyfegen’s Drug Contracting Simulator, you can model dynamic pricing strategies, optimize your market access plans, and streamline value-based agreements. Combined with the Lyfegen Library of real-world evidence and pricing models, you’ll be equipped to make data-driven decisions, ensuring faster patient access and successful contract negotiations.
Act Now – Book a demo of Lyfegen’s platform and discover how we can support your market access strategy: https://www.lyfegen.com/demo
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The Joint Clinical Assessment (JCA) is poised to fundamentally change how health technologies gain market access across the European Union. Designed to streamline the evaluation process, the JCA promises to bring greater consistency, transparency, and efficiency to how new therapies and medical technologies are assessed for clinical effectiveness. But what does this mean for your market access strategies?
What is the JCA?
The JCA is a central pillar of the EU’s updated Health Technology Assessment (HTA) regulations. Historically, pharmaceutical and medical device companies faced significant hurdles when introducing new health technologies across different EU member states. Each country has had its own HTA process, leading to duplicated efforts, inconsistent outcomes, and delays in patient access. With the JCA, clinical assessments will be conducted at the EU level, offering a unified approach to evaluating the relative effectiveness of new treatments.
Key Benefits of the JCA
The JCA is expected to address several long-standing challenges:
1. Streamlined market access: By replacing multiple national HTA evaluations with a single EU-level assessment, the JCA will reduce duplication and accelerate the time it takes for new health technologies to reach the market.
2. Consistency across the EU: With the JCA, companies can expect more predictable and transparent outcomes when navigating the regulatory landscape. This will help align market access efforts across all member states, making it easier for companies to plan and execute their market entry strategies.
3. Cost efficiency: By pooling resources and conducting joint clinical assessments, the JCA is expected to save HTA bodies across the EU millions of euros annually. This increased efficiency will also benefit pharmaceutical and medical technology companies by reducing the administrative and financial burden of complying with multiple HTA processes.
How Will the JCA Impact Your Market Access Strategy?
For companies looking to introduce new health technologies in the EU, the JCA will bring both opportunities and new considerations:
• Early Engagement Will Be Key: The unified nature of the JCA means that companies will need to engage early with EU-level HTA bodies to ensure that their clinical data meets the requirements of the JCA. This early engagement can help smooth the path to market and avoid potential delays.
• A Shift in Regulatory Focus: With clinical assessments now being handled at the EU level, companies may need to adjust their strategies for navigating national market access pathways. While the JCA will simplify the clinical assessment process, national bodies will still be responsible for non-clinical aspects, such as pricing and reimbursement decisions.
• Data Consistency and Quality: The JCA emphasizes the importance of high-quality, consistent clinical data. Companies will need to ensure that their submissions are robust and aligned with the JCA’s methodology to avoid discrepancies and delays in the assessment process.
The Role of Technology in Managing Market Access
As market access strategies evolve with the implementation of the JCA, technology platforms like Lyfegen can play a crucial role in helping pharmaceutical and medical technology companies adapt. Lyfegen’s platform simplifies the process of planning, tracking, and managing health technology assessments, ensuring that companies are well-prepared to meet the requirements of the JCA.
By leveraging advanced analytics and real-time data management tools, Lyfegen enables companies to streamline their market access efforts, ensure compliance with EU-level assessments, and maintain transparency throughout the process. With the increasing complexity of market access in the EU, technology will be a critical factor in ensuring success.
Conclusion: Preparing for the Future of Market Access
The JCA is set to transform market access strategies across the EU by creating a more efficient, unified, and predictable pathway for introducing new health technologies. As companies navigate this new landscape, early preparation, high-quality clinical data, and the right technological tools will be essential to staying ahead.
Unlock smarter market access strategies with Lyfegen’s advanced tools! The Lyfegen Drug Contracting Simulator empowers you to navigate the complexities of the JCA, model various pricing scenarios, and optimize your market entry plans. Combined with the Lyfegen Library’s extensive collection of market access models, you’ll have everything you need to succeed in the EU’s evolving regulatory landscape.
Act Now – Book a demo of Lyfegen’s platform and learn how we can support your market access strategy: https://www.lyfegen.com/demo
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