Despite the challenges of the pandemic, the pharma industry has enjoyed steady growth during the past two years, which is expected to continue in 2023. The global pharmaceutical market is forecast to expand at a CAGR of 5.7% between now and 2028. Hundreds of products are currently awaiting FDA approval, and new modalities, including cell and gene therapies, have increased to 21% of the drug development pipeline.
Of course, plenty of existing hurdles remain, along with several new challenges and opportunities. To better understand what 2023 will bring, I asked three of my colleagues to weigh in on upcoming market shifts. Their answers provide key insights into the year ahead.
Q: What’s the biggest challenge facing market access this year?
Lance Wolkenbrod, Senior Director, Commercial Solutions: Today’s pharmaceutical market is unlike yesterday’s, with a new focus on patient stratification, targeted populations, and drugs entering the market with novel targets and mechanisms of action. Pharma companies developing their market access strategy will face the continued challenge of determining how payers define value. Will they have enough data to demonstrate their drug’s clinical and economic value, and will that be sufficient to secure preferred access?
Consider the example of an oncology Center of Excellence, which can establish its own clinical pathway that may be more or less restrictive than payer policies. Although a pharma company may have negotiated for preferred access with the payers in a particular region, how can it overcome a restrictive pathway? Conversely, manufacturers can have ideal pathway coverage but not achieve uptake for their brand due to unfavorable payer coverage.
As the use of clinical pathways expands into non-oncology treatment areas, manufacturers will need to incorporate pathway monitoring into their pre-launch market access planning.
Saket Patel, Consultant, Advisory Services: One of the most notable events of 2023 will be the biologic cliff, when a handful of Humira biosimilars are expected to enter the market. Several other brands will face biosimilar competition in next few years, including Stelara. The challenge for payers will be to ensure appropriate coverage for biosimilar therapies to reduce patient expense.
For manufacturers, the challenge will be to compete with these low-cost biosimilars, especially in the inflammatory space. For major brands such as Taltz, Cosentyx, Skyrizi and Rinvoq, payers may decide to add further utilization management requirements to broaden the use of biosimilar products before using brand-name therapies that have been proven effective for many patients.
Jayne Hornung, Chief Clinical Officer, Pharmacy: In addition to the influx of biosimilars, market access in 2023 will be affected by high inflation rates and widespread supply chain insecurities. Pharma companies are still dealing with pandemic-induced manufacturing constraints ranging from labor shortages to delivery delays in materials and equipment. The rising cost of labor, transportation and raw materials is compounding the issue. Inflation will make pharma companies tighten their belts in all areas and could potentially increase the cost of drug therapies themselves, adding to the challenge of competing with the biosimilars.
Q: How do you expect pharma companies will react to the requirements of the Inflation Reduction Act? What changes might we begin to see in 2023?
Jayne Hornung: In addition to managing the cost of widely used prescriptions for chronic conditions like diabetes, the Inflation Reduction Act allows Medicare to negotiate the price of high-cost drugs. The act also requires drug manufacturers to pay Medicare a rebate when they raise prices faster than inflation.
In 2023, the responsibility of paying for these products will begin to shift from patients and CMS to manufacturers and payers. New incentives may force market adjustments to address these changing dynamics. Payers will likely seek to tighten formularies, and manufacturers must prepare to prove value when launching specialty products. The likely introduction of new out-of-pocket spending caps in Medicare will make it easier for patients to stay on higher-cost therapies throughout the year, versus enduring the co-pay fluctuations that so many face today.
Saket Patel: Payers will adapt to the IRA by requesting greater rebating on the commercial side of the business. This shift will prompt manufacturers to price products higher upon launch to make up for the loss of downstream price increases in their Medicare business.
Lance Wolkenbrod: I agree that we will see higher prices for new-to-market products, as that will keep yearly increases in balance with (or lower than) inflation rates. Also, the IRA specifies certain limitations to negotiated pricing; small-molecule drugs will not be subject to negotiation unless they have been approved for at least nine years, or biologics for at least 13 years.
Pharma companies might work to determine what loopholes exist in the law that could delay some of the provisions for prescription drug prices. Many may also maintain a “watch and wait” mentality until the next election cycle.
Q: Do you anticipate any exciting innovations in 2023? What can we look forward to in the cell and gene therapy space?
Saket Patel: There are several exciting gene therapies coming in 2023, including the first gene therapy approved for patients with hemophilia B. Hemegenix, a therapy developed by CSL Behring and uniQure, shows very promising results for patients in clinical trials, including sustained effectiveness after five years. As a result, most trial participants were able to discontinue their demanding prophylactic infusion schedule for factor IX replacement therapy. The use of gene therapies allows us to combat complex diseases over the long term and improve patients’ quality of life.
Jayne Hornung: The cell and gene therapy space is very exciting right now, as several manufacturers of therapies for extremely rare conditions are seeking FDA approval in 2023. These conditions currently have no FDA-approved treatment options available, so patients are eagerly awaiting market entry. While the patient numbers are low—many of these conditions have fewer than 500 patients worldwide—these drugs will be life-changers for the patients they cure.
Lance Wolkenbrod: Given that gene and cell therapies only entered the market about five years ago, the technology is starting to have a significant impact in certain areas with high unmet needs. Although we have seen many therapies focused on hematologic disorders, it will be exciting to see how this new technology can impact other therapeutic areas, leading to potential treatments in solid tumors and certain autoimmune diseases.
The other area ripe for innovation is early detection. How can lab insights help potentially detect early diseases or a recurrence? At ASCO this year, Dr. Marla Lipsyc-Sharf of Dana-Farber Cancer Institute presented a study highlighting the use of a liquid biopsy with the potential to alert an oncologist that a patient’s breast cancer may be reoccurring.
For patients with acute myeloid leukemia, one of the biggest challenges in understanding if a treatment has been successful is the ability to measure minimum residual disease, or MRD. Typically, these tests are difficult to complete, and they are often inaccurate. I see Exact Sciences making headway in their developmental program for a MRD solution that would provide early detection for certain patients.
Q: What key industry shifts should pharma companies prepare for in the future?
Saket Patel: With complex therapies entering the pharmaceutical landscape, look for payers to become smarter about market access. Payers will begin to deploy nuanced strategies to protect their financial security. With so many uncertainties, manufacturers will need to stay connected to the data.
Jayne Hornung: Pharma companies will need to prepare for a rise in value-based contracting under the medical benefit. Forecasts indicate that precision medicine, which includes predictive and personalized medicine, will be influential in prescribing therapies. Precision medicine is an emerging approach to disease treatment and prevention that considers individual gene mutations as well as an individual’s lifestyle, allowing physicians to more accurately predict the therapy that will work best for a patient.
Advances in precision medicine have already led to powerful new discoveries and FDA-approved gene therapies, but these come with a very high price tag and are often covered through the medical benefit. Even though many of these therapies being developed are for rare conditions that have extremely low patient volumes, some self-insured employers are starting to exclude these therapies from coverage, thereby forcing the employees into patient assistance programs. Pharma companies will need to develop sound contracting strategies for rare conditions through value-based agreements.
Lance Wolkenbrod: Like the rest of the world, the U.S. pharmaceutical market is beginning to see business reopen to a similar level of activity as before COVID-19, yet several questions remain: What might be the impact of another surge in infection rates? Will manufacturers’ field teams and medical science liaisons gain greater access to providers to explain new innovations? Will timelines to enroll in clinical trials finally shorten?
In the last two years, manufacturers have struggled with drug development and innovation. In addition to coping with the loss of redirected resources, pharma companies were also contending with longer patient enrollment periods—which in turn impacted their ability to manage adverse events and achieve their primary and secondary end points. It remains to be seen if the market can rebound to where it was before the pandemic, and if the increased utilization of decentralized clinical trials will continue.