Changing Payer Management Dynamics at Play in Oncology
When it comes to the degree of payer management within a therapeutic area, pharma companies are becoming the victim of their own successes. One prime example is the rapid growth of competitive therapies across tumor types, pharmacological classes, and mechanisms of action in oncology. Payers have responded to the launch of more innovative and highly effective therapies with increased utilization management restrictions to balance the cost and quality of care.
Traditionally, the oncology space has been subjected to minimal management from payers, which allowed providers and clinical organizations the autonomy to leverage their clinical judgement during therapy selection. The financials of a particular therapy have typically been of little concern in treatment decision-making, as the focus has been on the clinical benefit for the patient.
Today, the pipeline for oncology agents is robust. According to a recent Deloitte analysis of Evaluate data, oncology represents 20% of all current drug spending, as well as 36% of the biopharma R&D pipeline. Patients are also living longer than ever, which is a testament to the ingenuity and perseverance of the researchers who developed these groundbreaking therapies. While having this many therapy choices is a modern miracle for patients, it is unfortunately a double-edged sword from a payer management perspective.
How will payer management of oncology therapies evolve in the next few years as even more products hit the market? Let’s take a deeper look at one indication, multiple myeloma, for clues.
Payer Management in Multiple Myeloma
To take just one example, the NCCN clinical practice guidelines now have five lines of treatment for multiple myeloma. In the past three years alone, three novel therapies have been approved for use in multiple myeloma, and six novel or combination therapies are set for approval in the near future.
Multiple myeloma patients often progress through several lines of therapy and typically require multi-drug combination treatments, increasing the cost of care; while estimates vary, annual costs can approach $500,000 per patient. As more therapies are approved and patient longevity increases, payers are more likely to opt for more aggressive management to control costs while maintaining clinical outcomes.
In late 2023, MMIT’s Oncology Index polled payers representing ≥75% of commercial and managed Medicare lives about the potential financial impact of these new multiple myeloma therapies. According to the results, nearly 40% of payers believe these agents will have a significant impact on therapeutic area management.
Overall, the majority of payers are managing products for multiple myeloma based on traditional utilization management restrictions, such as tiering, step edits, prior authorization requirements, and exclusions. Payers representing 64% of commercial lives report “somewhat aggressive” to “very aggressive” utilization management, while 74% of Medicare payers report the same.
However, payers representing 35% of commercial lives and 22% of Medicare lives also indicated that they currently have no contracting or a low level of contracting in place for multiple myeloma treatments. Given the disparity between the degree of guideline-driven management and the level of contracting, there is clearly more bandwidth for payers to adopt increased contracting to manage the overall cost of treatment.
A Wide Range of Management Approaches
For payers, the key question for oncology utilization management is simply where to begin. Should payers target first-line products that have the greatest utilization and thus the greatest cost? Or should they minimize disruption to organizations, providers and members by targeting last-line therapies and easing into more stringent management?
Early payer management decisions will likely be guided by organizational priorities, but the days of a hands-off approach to payer management may very well be ending. Ultimately, increased payer management will result in oncology transitioning to the competitive contracting space we see in other therapeutic areas.
Health systems have already indicated a potential preference for therapies they are already familiar with, which could result in manufacturers developing deeper, and earlier, health system relationships with products. This may involve earlier touchpoints with an organization’s key opinion leaders, early and robust training activities, and assistance in building out clinical programs for a newly launched product.
As payers learn new lessons from the introduction of management principles in sensitive therapeutic spaces like oncology, we could see their application to other therapeutic areas which have previously seen no or minimal management. Pharma companies would be wise to closely monitor management shifts in therapeutic areas which have traditionally been bound by lower management levels.
For key insights on current and future access restrictions within specific oncology therapeutic areas, learn more about MMIT’s Oncology Index.
