In the Eye of the Storm: Payer Value Perspective Key to Market Access
Rita E. Numerof, Ph.D delves into the topic of market access, offering a detailed study on how best to approach, and work with, payers.
Pharmaceutical companies are increasingly challenged to demonstrate the value of new products – in particular by payers who are demanding hard comparative economic and clinical value (ECV) data to justify premium pricing, price increases and sometimes just to maintain the status quo.
On a global basis, government health authorities are increasingly requiring economic and clinical evidence as cost containment becomes a central issue. Individual physicians remain important, but the power of payers and organized provider groups to impact market access, product uptake and profitability is rapidly growing.
In this new environment, most companies understand that they must create a product “value proposition”. However, the practical implications of developing persuasive and compelling data for different stakeholders often are not realized, and the organizational changes required to develop this data are difficult to implement across an entire company.
Significant differences exist between the perspectives of manufacturers and those of other stakeholders (payers, in particular) over what features add value or are considered innovative. These differences have implications for how the potential of a new product is identified and how its value proposition should be developed. Going forward, companies will need to refine their insight into stakeholder value perspectives, and ensure that they are developing compelling data-based narratives to support effective market positioning.
Understanding Perspective Differences
Payers often view the potential of a new product in different terms than manufacturers. Manufacturers have tended to view the value of a new product in terms of its clinical capabilities, features of interest to physicians, or novelty. As a result, product makers have traditionally focused almost exclusively on physician reactions to product attributes, features, and benefits. Product value, from this perspective, often relied on KOL (key opinion leader) reactions to these attributes.
In contrast, payers generally view the value of a new product in terms of its potential to improve patient management and overall treatment costs. This perspective requires a broader view of the product in the context of clinical use, and its potential impact on economic and clinical outcomes.
In the past, product regulatory approval was sufficient to bring a new product to market and obtain satisfactory reimbursement. Going forward, product approval alone does not necessarily mean payers will be willing to reimburse a product, or reimburse it at the desired rate. Furthermore, what constitutes value may vary considerably from country to country and payer to payer, depending on healthcare practices, patient demographics, socioeconomic conditions, whether the payer is a public or private entity, and the competitive market dynamics among private payers.
Understanding how the potential of a new product is viewed by different stakeholders has implications for how its potential ECV proposition is developed. As a starting point, companies should approach unmet medical needs from a broad perspective, including trends in epidemiology, medical practice, regulatory behavior, payer strategies, patient attitudes, and government policy, in addition to the clinical perspectives of physician thought leaders.
To fully identify the potential value of products requires looking beyond product attributes such as physician ease of use. Focusing narrowly on attributes of interest only to physicians leads to head-to-head comparisons with other products on this narrow basis and, at times, an overemphasis on single attribute superiority. Instead, new products should be evaluated on how they potentially improve current treatment regimens for the condition addressed, save costs and improve outcomes. For comparative purposes, determining the potential of a new drug to take the place of multiple drugs in a current therapeutic regimen could be important. Demonstrating equivalent efficacy (vs. superiority) may be sufficient – and of interest to payers – if the product has an improved dosing frequency (and improved patient compliance) or other benefit, such as reducing the number of medications required for treatment or the number of physician visits.
A new product entry in a market space with established, safe and effective competitors faces more significant hurdles to reimbursement, uptake and penetration than in therapeutic areas where the choices are more limited in number and effectiveness.
In light of payers’ increasing demands for ECV evidence to support products, waiting for regulatory approval to begin generating that evidence could mean a delay of months or even years to secure product reimbursement. To avoid this, companies will need to develop new organizational capabilities and define a process for securing safety, efficacy, and economic data concurrently early in the development process.
ECV: Moving Beyond Safety and Efficacy to Demonstrate Product Value
To fully identify and demonstrate a product’s potential value requires embedding ECV thinking into critical decision-making, and understanding stakeholder requirements. Key capabilities include being able to:
- Identify unmet medical needs, evaluate market opportunity, and define product positioning in terms of ECV.
Pharma has historically looked at unmet needs, market opportunity, and product positioning from the perspective of the physician. Now the additional perspective of the payer must be given similar attention, and that perspective is largely one focused on product value … the ability to reduce medical costs and/or improve outcomes. Every market need and product benefit should be evaluated through the lens of “What is it worth in ECV?”, especially as compared to generics and other products that already exist in the market. The possibility of strengthening a value proposition to payers lies in developing data demonstrating that the product reduces cost or improves clinical outcomes compared to alternatives.
- Redefine clinical development objectives and align capabilities to effectively integrate the demonstration of ECV concurrently with pursuit of regulatory approval. You’ll need an integrated clinical, regulatory, and commercial strategy for both pipeline and in-line products that incorporates ECV and seeks to maximize the risk-adjusted value of your product portfolio to the company.
- Embed ECV in strategic business decisions, including therapeutic focus, business development, pipeline portfolio, and lifecycle management.
Focus on therapeutic areas that offer the greatest opportunities to enhance ECV in light of your current portfolio. Companies must be able to determine how to most effectively position current and pipeline products in terms of ECV. They’ll need to identify the evidence required to support the positioning, and the expected benefits, costs, and risks of pursuing that evidence.
Are you ready?
ECV is not a theoretical construct — it is value as defined by payers, and reflects their economic interests and timeframes for return on investment. Creating superior ECV needs to become a core organizing principle across your company. Pharmaceutical companies must consistently be able to make a persuasive case that your products will deliver a compelling combination of better outcomes for patients and lower cost of care to the payer, compared with the available alternatives.
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