Traditional markets have grown crowded with acceptable treatments for large patient populations, which can limit access for drugs in development for these therapeutic areas. Rather than taking a head-on approach to an entire market and the competition therein, it may be advantageous for manufacturers initially to consider more targeted opportunities.
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Formulary Exclusion Lists Create Challenges for Pharma and Payers Alike
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Pharmaceutical innovation has led to tremendous advances in the ability to improve the outcomes for patients across many conditions. From hypertension to diabetes to hepatitis C, the efficacy of pharmaceutical treatments have advanced to where some feel the existing options are “good enough” to address patient needs and achieve treatment goals. So, when new products become available in these therapeutic areas, it can be challenging to assess where or even if these drugs have a place in treatment algorithms or formularies, even with demonstrated improvements in clinical trial efficacy.
The hurdles grow higher for payers—and, increasingly, for patients—when the price of new products significantly exceeds the price of existing options. The question becomes: how does a product demonstrate its value in the absence of real-world experience? One answer: start small.
Historically, clinicians would identify a group of patients in which to try a new product and assess the response over time. However, with the escalating launch prices of many new products, the payers’ approach has evolved to highly limiting benefit coverage at launch through various utilization management tools such as step therapy, prior authorization, or lack of formulary coverage altogether.
In response, a more nontraditional approach to overcoming this obstacle may take the form of adjusting the initial target to a smaller treatment population within the main group where true unmet need clearly remains, despite existing therapies. This also serves to avoid a market perception—especially with payers—that use in patients where “good enough” options already exist will not be aggressively pursued.
Common behavior among clinicians is to prescribe according to criteria determined by clinical data, US Food and Drug Administration (FDA)–approved indications, established treatment guidelines, and manufacturer promotions, and clinicians are not inclined to move out of this comfort zone. So, when presented with niche options, clinicians are likely to show less enthusiasm for the product, even when a portion of their patients are not achieving goals on the existing approved therapies. In a health care system seeking to become more value focused, this generalized thinking could result in missed opportunities for improved outcomes overall. And, for the manufacturers who have invested heavily in bringing these products to market, it generates frustration when their near-universal vision to improve the health of patients is not achieved.
How are these objectives to be aligned? One good option is to adopt the same “start small” mindset across stakeholders. Manufacturers have long avoided this approach for fear of “niching” a product, otherwise considered as capping its commercial opportunity. Yet, with the market increasingly gravitating toward precision medicine and value-based reimbursement, this fear is not necessary. When stakeholders can align initially on a patient population, all are much more likely to achieve, and then perceive, success. It is incumbent upon each stakeholder to assess the evidence from early treatment experiences and follow-on data to refine the appropriate patient population early in the lifecycle. Manufacturers need to consider earlier investment in research endpoints that link to economics and real-world data, oftentimes doing so in conjunction with payers. Value-based arrangements can be the key component of bridging product cost and overall value among manufacturer, payer, and clinician.
Within those therapeutic areas where good competing treatment options exist, starting with smaller targeted patient groups can minimize early launch frustrations and may result in a steadier, more predictable value realization by payers, better commercial performance by manufacturers, and more positive outcomes for patients. In today’s growing era of pharmaceutical innovation, underpinned by precision medicine and payer desire to be more precise in valuing innovation, targeting appropriate patient populations early can lead to success for all.
