Spotlight on Market Access

The Inflation Reduction Act (IRA) will allow Medicare to negotiate prescription drug prices, starting with a limited set of therapies in 2026. But while some aspects of the law are clear, some uncertainties around others exist. Biopharma companies need to start preparing as much as they can for some of the challenging situations that may arise, recommends one industry expert.

Josh Schimmer, an analyst at Evercore ISI, pointed out during a Nov. 17 webinar hosted by his company that the IRA has “many, many moving parts, some of which are…really quirky, some of which seem a little unsustainable in terms of the dynamic that they might have. It’s going to impact so many companies in this industry sooner or later; some might be spared. But those are probably going to be smaller companies. So the bigger you are, the more likely you are at some point to have to face the IRA.”

Sanford Health Group is the health insurance unit of Sanford Health, a large, integrated nonprofit health system of 47 hospitals based in Sioux Falls, South Dakota. It is the second-largest insurer in both its home state and neighboring North Dakota and also has a presence in Iowa, Minnesota and Nebraska. Sanford largely serves the commercial health insurance markets, having a strong presence in both the North and South Dakota exchange markets. The majority of its members are enrolled in risk-based commercial insurance products. UnitedHealth Group’s OptumRx serves as Sanford’s pharmacy benefits manager and also facilitates most of its specialty pharmacy benefits.

While lobbying expenditures from the health care industry have been rising in recent decades, drugmakers and providers — not insurers — are the main drivers of that spending growth, according to recent research. Still, experts tell AIS Health, a division of MMIT, that the managed care sector’s influence over policy shouldn’t be underestimated.

“Overall, the fact that the industry keeps lobbying means that this investment has some good return; otherwise, they would have stopped,” says Ge Bai, Ph.D., a professor at Johns Hopkins University’s schools of business and public health.

Lobbying spending by the health care industries reached $713.6 million in 2020, a 70% increase over the past two decades, according to a recent JAMA Health Forum analysis based on data compiled by OpenSecrets. The growth was mainly driven by pharmaceutical and health product manufacturers and providers. Expenditures were highly concentrated among a small subset of firms, especially for payers, with the top 10% of health plans responsible for 70.4% of spending.

As researchers gain growing insight into the mechanics of what makes diseases tick, more and more genetic tests are coming onto the market to help make sure the right patient gets the right drug at the right time. While these diagnostics can help inform diagnosis and treatment for patients, the sheer volume of these tests may be overwhelming payers in their coverage decisions. Stakeholders should work together to help establish the clinical utility that payers need to make coverage decisions on these diagnostics, industry experts say.

Daryl Pritchard, Ph.D., senior vice president of science policy at the Personalized Medicine Coalition (PMC), describes the landscape of coverage for genetic testing as “uneven. Payers are increasingly considering coverage and reimbursement of genetic testing products and services.” However, he tells AIS Health, a division of MMIT, “there remain significant challenges in establishing coverage policies and payment rates for diagnostic tests that reflect the value of their care. As a result, many newer novel diagnostics are under-reimbursed or not covered at all. Such practices ultimately restrict patient access to some needed tests and to optimal care. Coverage and reimbursement policies vary widely among different payers, and decision-making processes are often inconsistent and not transparent.”

The FDA has approved around 100 targeted therapies for different types of cancer, with many more in the pipeline. Current agents for non-small cell lung cancer (NSCLC), for example, target more than 10 different biomarkers, and more than 70% of people with the condition have alterations in their tumors that are tied to available treatments. But a recent study found that due to practice gaps in the precision oncology pathway, just more than one-third of patients with biomarkers that could be treated with an FDA-approved therapy are actually benefiting from those drugs.

Lung cancer is one of the most common types of cancer, and NSCLC makes up the bulk of the cases. Many of the agents approved for NSCLC are targeted therapies that are indicated for specific subsets of the disease, and numerous companion diagnostic tests are available to help providers determine the best treatment for a patient.

In an executive order released Oct. 14, the Biden administration directed the CMS Center for Medicare and Medicaid Innovation (CMMI) to “to consider additional actions to further drive down prescription drug costs,” building on the Medicare drug price negotiation stipulations of the Inflation Reduction Act (IRA). D.C. insiders tell AIS Health, a division of MMIT, that CMMI could pull old policy proposals off the shelf when it works to “test new ways of paying for Medicare services that improve the quality of care while lowering costs,” as the administration puts it.

The executive order isn’t specific about what policies the White House would prefer CMMI look into. However, the administration will know the possibilities fairly soon: CMMI will have 90 days to develop recommendations. Per a White House fact sheet, the final product will be “a formal report outlining any plans to use the Innovation Center’s authorities to lower drug costs and promote access to innovative drug therapies for Medicare beneficiaries.”

The average annual premium for employer-sponsored health insurance in 2022 was $7,911 for single coverage and $22,463 for family coverage, similar to the average premiums last year, according to the Kaiser Family Foundation 2022 Employer Health Benefits Survey. On average, employees contributed 17% toward single coverage premiums and 28% toward family coverage premiums. Among employees at small firms, 33% of them chose a plan where the employer paid the entire premium for single coverage, compared with only 6% at large firms. Meanwhile, 31% of small firm workers were in a plan that required them to contribute more than half of the premium for family coverage.

Since the FDA’s approval of the first biosimilar — Zarxio (filgrastim-sndz) from Sandoz, a division of Novartis Pharmaceuticals Corp. — on March 6, 2015, the agency has approved almost 40 more agents via the 351(k) pathway established under the Biologics Price Competition and Innovation Act (BPCIA), itself part of the Affordable Care Act (ACA). Although not all of those agents have launched yet, and almost all of the ones that have are all professionally administered, industry experts say they expect to see more competition in the space, depending on interchangeability status, provider uptake and the impact of the Inflation Reduction Act.

CVS Health Corp.’s Aetna is the third-largest health insurer in the U.S., serving more than 22 million lives across all market sectors. Nationally, Aetna ranks No. 3 in administrative services only (ASO) non-risk contracting, No. 4 in the group risk commercial market and No. 3 in Medicare Advantage (MA), an area of significant investment for the insurer in recent years. For the 2023 plan year, Aetna will expand its MA offerings to 141 new counties across its 46-state market, compared to 83 counties in 2022. And as the COVID-19 pandemic rattled the employer group markets, Aetna in 2022 returned to the Affordable Care Act (ACA) exchanges after pulling out in 2018. While it enrolls just under 60,000 exchange lives as of October 2022, its footprint will expand to four additional states in 2023.