Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
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Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
Learn more
Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
Learn more
Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
Learn more
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LEARN MOREPayer contracting is an important component of access in the U.S. pharmaceutical market, often being the key barrier as manufacturers grapple with balancing access coverage and margin. With the continuing and ever-increasing squeeze on payer rebates, it is more important than ever for brands to understand the impact and return of every price concession and payer contract.
The industry standard that has segmented payers by their willingness and ability to control access may no longer be enough. IQVIA’s Market Access Strategy Consulting Practice recommends extending analysis beyond the current best practice to further recognize and understand the drivers behind payer control, and then to strategize accordingly.
A common approach in payer landscape and payer segmentation has been to use both formulary and claims data to measure the willingness and ability, respectively, of payers to manage therapy utilization within a market. The fundamental analyses that support this approach include the measurement of lives covered under the contracted formulary status (willingness) and durable rejection rates among new patients (ability). Durable rejection1 rates help answer two questions for the manufacturer:
Manufacturers use these results to better determine contract value and refine their negotiation strategies. However, as the rebate stakes increase year after year, an even deeper understanding is required. Manufacturers strategize where to focus their access rebates, and so they must understand the deeper impact of these decisions. This is especially true when extrapolating beyond the individual contract and assembling a holistic, gross-to-net picture.
Payer contracting analytics must evolve to meet the challenges put forth in today’s access climate. Beyond the willingness and ability measures that provide a valuable foundation, analytics must look further at the drivers that ultimately influence prescription adjudications – or lack thereof. This begins with understanding the underlying books of business within a payer.
Payers are made up of multiple plans and benefit designs, which can vary by geography, by employer, and more. Because of this heterogeneity, contracting strategies must conduct analyses with more granularity, and quantify how many books of business under a given Pharmacy Benefit Manager (PBM) or insurer follow the national formulary and abide by rebating terms. This can provide more clarity as to the number and distribution of lives affected by the negotiated formulary, as well as the variation in utilization management among customized plans.
In Figure 1’s example, the national contract for preferred, unrestricted access is reflected in a brand’s distribution of lives within that payer. A claims-level look further reveals that while most new patient attempts are filled within thirty days, some new patient attempts are restricted. Further inspection at the book of business level reveals that restrictions, even in preferred unrestricted contracts, may be localized to select plans. A brand may not only use this information to better calculate the contract’s value, but it could also develop other market access strategies related to patient support and physician detailing based on these insights.
Payer contracting measures must also evolve to account for market events, evaluating how effectively payers move prescription volume with the use of their formularies. Timely tracking and historical examples, when combined, provide the accuracy required to estimate impact and to plan a strategic response, particularly in markets where formulary changes are common. As before, analysis at the book of business level is crucial for determining how pervasive and quick a payer’s formulary change can be.
The data in Figure 3 demonstrates that market share changes following a formulary event can deviate substantially from the overall payer average and vary across books of business. While the overall movement of share is valuable for high level estimates, the subnational nuance can provide insight into the insurer’s timing and capacity for influence across its business. Finer granularity also enables brands to develop a more effective and subnational response, and speaks to the importance of more sophisticated analytical practices. Traditional share shift models are no longer sufficient for contracting decision making.
Increasing margin pressure has forced brands to better manage their contracting practices as well as other investments, such as physician targeting and patient support programs. To effectively strategize in today’s market access environment, brands require more specificity and deeper insight from their analytics. By looking beyond national averages, retiring outdated share shift models, and investigating payers by their books of business, manufacturers are able to make more precise decisions and better preserve margin.
Utilization management, however, is only one component in a data-driven, subnational approach to contracting strategy. Brands must also consider how patients’ benefit designs and participation in support programs may alter the access investments required in a given book of business. Geographic variations in population demographics, and even prescriber-level variation, can influence a brand’s approach.
This complexity – within the U.S. biopharmaceutical industry and within market access – is only exacerbated by recent events and growing uncertainty. Manufacturers must look towards evidence and data to best invest in their products and facilitate patient access.
1 Durable rejection rates refer to the proportion of new patient therapy initiations that are not approved due to payer restrictions within a certain look-forward period. Patients that initiate therapy, are restricted, but manage to achieve coverage within the measurement period are not considered durable and are instead approved.
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