SlideShare a Scribd company logo
Original Article

                              Roadmap to reimbursement
                              and access
                              Received (in revised form): 23rd December 2009


                              Rhonda Greenapple
                              is President of Reimbursement Intelligence. She spent her career focused on gaining access and reimbursement for her clients.
                              Her clients’ products have ranged from unique chemical entities to highly competitive therapeutic categories. Reimbursement
                              Intelligence was founded to serve her desire to focus strictly on biologics and emerging technology and the payer factors that
                              can influence commercial success. Over the past 15 years, she has been involved in the reimbursement launch planning for
                              over 40 products. She has spoken at professional meets both domestically and internationally on a range of topics including
                              Reimbursement Due Diligence for investors and emerging biotech companies, and Medicare Part D drug benefit trends. She is a
                              columnist in Fierce Pharma Industry Voices on reimbursement trends and has published in Managed Care Magazine, American
                              Health and Drug Benefits and Oncology News International. Greenapple received her BS from Cornell University and received her
                              Master’s of Science in Public Health from the University of North Carolina.


                              Julie Schachter
                              is Vice President of Strategic Planning. She is responsible for developing managed market strategies and business planning and
                              is the head of Research and Analytics at Reimbursement Intelligence. As the head of the research team, Schachter is responsible
                              for proprietary syndicated surveys as well as all client-driven research conducted in both the United States and European
                              payer markets. She has more than 10 years of experience in the pharmaceutical industry and has successfully launched
                              pharmaceutical drugs and medical devices in various categories. Before working at Reimbursement Intelligence, Schachter
                              worked at Bayer Healthcare and Novartis Pharmaceuticals in both Product and Marketing Management positions and was key to
                              the launch of several unique products in the United States. She also worked as a private consultant with several biotechnology
                              and life science companies on product and disease management initiatives. Schachter received her bachelor degree from
                              University of Delaware and is an MBA candidate at Seton Hall University.


                              Maxim Miller
                              is Manager of Market Research and Analytics. He leads the Reimbursement Intelligence research and analytics team to deliver
                              strategic recommendations for pharmaceutical, biotech and device manufactures. With over 10 years of reimbursement and access
                              consulting. Miller is sought by emerging biotech as well as top 10 pharmaceutical companies. He has conducted diabetes landscape
                              research in multiple therapeutic categories. Previously, Miller worked as an analyst at both Campbell Alliance and PriceSpective LLC.
                              He received his BS in Marketing/International Business from Drexel University and is an MBA candidate at the Temple University – Fox
                              School of Business.


                              ABSTRACT The article evaluates the recent challenges faced by the pharmaceutical
                              industry and the impact of those challenges on the product development process.
                              Upon identification of key hurdles faced by the pharmaceutical companies during
                              the development process, the article proposes solutions that may help to optimize
                              the commercial opportunity of select pharmaceutical products. Although the clinical
                              perspective is addressed, the focus of the article is on the economic perspective;
                              specifically, strategies that pharmaceutical manufacturers can employ to maximize
                              access and commercial viability of their pipeline products.
                              Journal of Medical Marketing (2010) 10, 15–23. doi:10.1057/jmm.2010.1

                              Keywords: pharmaceutical product value assessment; pharmaceutical product drug
                              development process; life cycle management
Correspondence:
Rhonda Greenapple
Reimbursement Intelligence,
                              BACKGROUND                                                           cost to bring a drug to market continues
2 Shunpike Rd., 3rd Floor,    In 2008, the Federal Drug Administration                             to rise along with an increase in the
Madison, NJ 07940, US
E-mail: rgreenapple@          (FDA) approved 25 novel treatments, an                               failure rate as products progress through
reimbursementintelligence
.com                          increase from 19 the previous year.1 The                             the development process. Currently, there




                              © 2010 Macmillan Publishers Ltd. 1745-7904       Journal of Medical Marketing Vol. 10, 1, 15–23
                                                            www.palgrave-journals.com/jmm/
Greenapple et al



                        are approximately 2000 drugs in various                         significant resources into development of
                        stages of clinical development.                                 novel drugs, they must be cognizant of
                        Approximately one quarter of the drugs                          the importance of incorporating the
                        are in Phase II/III or Phase III clinical                       economic value proposition of their
                        trials. Although the rate of approval                           pipeline products into the overall value
                        improved moderately from 2007 to 2008,                          proposition. Currently, the pharmaceutical
                        the overwhelming majority of pipeline                           industry faces significant uncertainty as
                        products are never brought to market as                         legislators attempt to address the rising costs
                        evidenced by the numbers of agents in the                       of health care. Consequently, the economic
                        pipeline versus those that received FDA                         value proposition may become as important
                        approval.2 Furthermore, the cost of                             as the clinical profile. Historically,
                        development is an integral component in                         manufacturers focused on the clinical
                        the selection process of which molecules                        profile of pipeline products and the
                        will be chosen to progress through the                          economic value proposition was often a
                        development process.3 The conservative                          secondary concern. However, as cost-
                        estimated cost of developing a single New                       effectiveness gains traction as one of key
                        Chemical Entity exceeds US $800 million                         components of a drug’s value proposition,
                        with clinical costs comprising over $400                        the manufacturers will have to learn to
                        million of the overall cost. A substantial                      identify as well as effectively communicate
                        portion of the development costs is                             their product’s economic value story. Most
                        derived from late-stage clinical trials.                        importantly, given the cost of development,
                        Given that over 60 per cent of trials are                       the expectations for identification and
                        terminated during late-stage development,                       understanding of a product’s economic
                        this is an area of concern for the health                       value story may be required earlier in the
                        care industry as a whole due to the                             development process. This article will
                        resources that are wasted by the failed                         identify key considerations along the
                        trials. Phase III trials are typically the                      development pathway, as well as offer
                        costliest due to the number of patients                         actionable strategies that will serve to assist
                        involved in the trial, typically in the                         the manufacturers in optimizing their
                        thousands, and can cost tens or even                            product offering’s economic value story.5
                        hundreds of millions of dollars to conduct.
                        Consequently, high costs associated with
                        late-stage clinical trials emphasize                            OBJECTIVES
                        the importance of minimizing
                        commercialization risks while maximizing                        • Understand the key questions to
                        shareholder value. Furthermore, the                               ask regarding access and reimbursement
                        emphasis to minimize costs extends to                             at key product lifecycle milestones.
                        molecules that fail during late-stage                           • Identify opportunities and challenges
                        clinical trials, as well as those that are                        in private and government health
                        brought to market. Those products that                            plans that can impact commercial
                        reach the market are burdened to recoup                           success.
                        the resources invested in the molecule                          • Integrate reimbursement and health
                        during clinical development.4                                     outcomes activities throughout the
                           This article will examine potential                            commercial planning process.
                        strategies and methodologies that                               • Ensure continuous monitoring of
                        manufacturers can employ in order to                              the entire managed markets
                        maximize the commercial success of their                          landscape that can impact access and
                        product portfolio. As manufacturers invest                        reimbursement.




16                      © 2010 Macmillan Publishers Ltd. 1745-7904   Journal of Medical Marketing Vol. 10, 1, 15–23
Roadmap to reimbursement and access



METHODOLOGY                                                     PHASE I: PROOF OF
This article will review four critical steps                    CONCEPT
in product development: Proof of                                The high cost of product development
Concept, Opportunity Identification,                             coupled with poor economic conditions
Pre-launch Planning and Post-launch                             makes it vital for manufacturers to be able
and Life cycle Management. In addition,                         to efficiently and effectively identify
reimbursement, health outcomes and                              products with the greatest potential for
pricing activities, as well as key questions                    commercial success. Conducting a market
for consideration at each stage will be                         landscape analysis during early phases of
identified.                                                      product development can help to identify
                                                                early clinical and economic scenario
                                                                models that incorporate: the unmet
INTRODUCTION                                                    medical needs in the category; the pricing
In the current health-care landscape,                           and reimbursement of currently available
there is greater scrutiny paid to                               products and how they are managed;
expensive biotech products in an                                clinical and economic profiles; which
environment where biologics represent                           Health Economics Outcomes Research
30 per cent of the cost of cancer                               (HEOR) and clinical endpoints will be
treatment 3 and are evolving into a key                         required; and ultimately gauge the
component of many therapeutic                                   product’s commercial viability.
treatment algorithms. Health plans, both                           In oncology, for example, there are
government and private, are attempting                          more than 850 agents in development.3
to ensure appropriate access and                                For a new oncolytic agent in the proof
utilization of costly biologics via                             of concept stage, the first step will be to
implementation of management tools                              determine whether the product can meet
such as: prior authorization, step edits,                       an unmet need versus current or future
quantity limits, genetic testing, lockouts,                     competitors. In a recent survey regarding
exclusions, and formulary management.                           key tumor types (Figure 2),
Additionally, a number of health plans,                         Reimbursement Intelligence asked 60
public and private, have also altered                           Medical and Pharmacy Directors from
their benefit design to include a                                private and commercial health plans,
specialty tier that often requires the                          which tumor types they perceived to have
patient to pay a co-insurance for use of                        the greatest unmet need for new cancer
injectable and biologic products, with                          therapies. The report also assessed the
the member paying anywhere from                                 impact of select clinical and HEOR
10–40 per cent of the cost of the drug                          endpoints that novel oncology therapies
(Figure 1(a) and 1(b)).6                                        will be expected to achieve in order to
   Health outcomes data becomes even                            demonstrate incremental value over
more important for costly biologics, as the                     current standard of care. This type of
Centers for Medicare and Medicaid                               analysis is the crucial first step in ensuring
(CMS) and private health plans are                              that resources are allocated appropriately
considering comparative effectiveness                           in R&D efforts.
analysis and lowest cost alternative when                          Another trend in the current health-
creating their product formularies. In                          care environment is the increase in 505
order to maintain access and utilization,                       (2)(b) products introduced into the
manufacturers must be able to demonstrate                       market. The 505 (2)(b) process allows for
cost effectiveness and the product’s impact                     a faster development time without the
on the total cost of care.                                      need for extensive clinical trials. Generally,




© 2010 Macmillan Publishers Ltd. 1745-7904   Journal of Medical Marketing Vol. 10, 1, 15–23                17
Greenapple et al



                        505 (2)(b) products are generic products                              generic with many iterations introduced
                        that have new delivery systems, a                                     under the 505 (2)(b) path, that utilizes
                        formulation change or a novel dosing                                  novel delivery mechanisms. Table 1 shows
                        regimen that allow them to have an                                    three migraine medications that used the
                        abbreviated New Drug Application.                                     505 (2)(b) pathway to launch products
                        The FDA allows the manufacturers to                                   derived from the same ingredient
                        use safety and efficacy data already in the                            (sumaptriptan).7
                        public domain thereby eliminating the                                    In these examples, the primary market
                        need to conduct trials that would                                     landscape analysis should focus on the
                        demonstrate safety and efficacy.7                                      current and future (2 years out) markets,
                           The 505 (2)(b) path allows companies                               including an analysis to determine if
                        to shorten the development times and                                  payers perceive the new delivery
                        significantly lower R&D costs. For                                     mechanism to offer any tangible
                        example, the migraine product Imitrex                                 improvements in health outcomes.
                        (sumatriptan) provides an example of a                                Without concrete improvements in health

                                                                        2006    2007   2008     2009

                                                                                                           96%    98%
                                                        93%      92%
                                                                          87%                        88%
                                                 82%

                                                                                          69%




                                             Stand-alone Prescription Drug Plans        Medicare Advantage Drug Plans




                                                50%                                           48%
                                                                                                                  55%
                                                                       57%                                               Coinsurance rates:

                                                                                                                                33%

                                                5%                                            10%                               26%-30%
                                                                                                                  4%
                                                                        6%                                                      25%
                                                                                                                                <25%
                                                45%                                           39%                 39%
                                                                       37%


                                                                                              3%                  2%
                                               2008                    2009                   2008                2009
                                                         PDP's                                      MA-PD plans



                        Figure 1:    (a) Share of enrollment in Medicare Part D plans with tiered cost sharing using specialty tiers,
                        2006–2009; and (b) Share of enrollment in Medicare Part D plans with specialty tiers, by specialty tier co-insurance
                        rate, 2008–2009.
                        Source: Georgetown/NORC analysis of data from CMS for PedPAC and the Kaiser Family Foundation and Henry
                        J. Kaiser Family Foundation.
                        Notes: (a) Estimates weighted by enrollment in each year; and (b) Estimates weighted by enrollment in each
                        year. Analysis excludes small share of plans with copayments for specialty tiers (0.1% of PDPs and 2% of
                        MA-PD plans). Analysis of MA-PD plans excludes Special Needs Plans.




18                      © 2010 Macmillan Publishers Ltd. 1745-7904      Journal of Medical Marketing Vol. 10, 1, 15–23
Roadmap to reimbursement and access



                  10      9.6
          10                      9.2    8.9
            9
            8
                                                  6.9    6.6
            7                                                   6.2    6.1    5.8    5.7        5.5
            6                                                                                         5.4   5.4
            5
            4
            3
            2
            1
            0




                                10 = Ranked Greatest Unmet Need, 1= Ranked Lowest

Figure 2:       Payers perception of unmet need for new treatment options.



Table 1: Migraine medications that used the 505                   Table 2: Key questions for consideration – ‘Proof of
(2)(b) pathway to launch products derived from the                Concept’
same ingredient (sumatriptan)
                                                                  Does this product meet an unmet need versus current
Brand                  Delivery         Manufacturer                or future market entrants?
                                                                  Who are the key stakeholders, and what is their
Sumavel™               Needle-free      Zogenix                     involvement in managing the disease and treatment
  DosePro™               delivery                                   pathways?
  (sumatriptan           system                                   How are payers managing the disease and
  injection)                                                        therapeutic category?
Zelrix™                Transdermal      NuPathe                   What is the commercial viability?
  (sumatriptan           patch                                    What HEOR/Patient Reported Outcomes (PRO)
  transdermal                                                       have been used in this indication?
  patch)                                                          Which HEOR/PRO endpoints will need to be
Levadex™               Oral inhaled     MAP                         developed and tested during Phase II of clinical
  (sumatriptan                           Pharmaceuticals            development to optimize market access?
  oral inhaled)                                                   What product attributes will be important in this
                                                                    category?



outcomes, the overall value proposition of                        PHASE II: OPPORTUNITY
the product may not be enhanced, and in                           IDENTIFICATION
some instances it may be diminished.                              Phase II clinical trials play an integral role
With no perceived ‘value’ the 505 (2)(b)                          in determining the ultimate success or
product will likely be disadvantaged in                           demise of a product. After Phase I trials
health plans that have implemented                                establish the ‘proof of concept’, Phase II
generic first formularies designed to                              trials build upon the outcomes of Phase I
transition patients from branded to generic                       trials and further test the molecular
drugs. Conducting comprehensive due                               entity’s safety and efficacy. Furthermore,
diligence at this early stage can help to                         well-designed and executed Phase II trials
ensure that the value proposition resonates                       should enable the manufacturer to make
with the appropriate stakeholders. Table 2                        the go or no-go decision regarding
shows the questions that must be                                  progression to Phase III trials. Phase III
considered before commencement of                                 trials often require several years to
proof of concept trials.                                          complete, and can cost tens or even




© 2010 Macmillan Publishers Ltd. 1745-7904     Journal of Medical Marketing Vol. 10, 1, 15–23                       19
Greenapple et al



                        hundreds of millions of dollars.                                Table 3: Key questions for consideration –
                                                                                        ‘Opportunity Identification’
                        Consequently, manufacturers rely upon
                        the outcomes of Phase II trials to inform                       What PRO endpoints should be included in our
                                                                                           clinical trials?
                        and offer guidance for the largest                              Does the clinical program enhance the value
                        investment they have to make during the                            proposition?
                                                                                        Are the endpoints correct comparators, and is the
                        development process.8                                              subpopulation in the Phase II studies relevant for
                           Beyond the financial pressures associated                        market release?
                        with Phase II trials, Phase II trials                           Is there a need to undertake burden of illness studies
                                                                                           to support value proposition and market building
                        generally unveil the product’s clinical                            and positioning activities?
                        profile, and consequently initiate the                           What is the optimal pricing band, based on expected
                                                                                           levels of effectiveness, physician and payer
                        development of the compound’s value                                perception and pricing research?
                        proposition. These early data provide
                        enough information to begin gauging
                        success factors for the product, assuming                       manufacturer should also seek to
                        the trials result in clinical significance.                      understand if the proposed Target Product
                           Other market factors, including pricing                      Profile has clinical and economic
                        scenario planning and price sensitivity                         relevance for payers across all target
                        analysis, economic modeling, value                              markets. Although it may seem too early
                        proposition validation and payer evidence                       at this phase of development to analyze
                        requirements, are especially important for                      these market factors, it could ultimately
                        manufacturers considering exit strategies                       save a manufacturer millions of dollars and
                        for their compound in development. The                          thousands of man hours. Consequently, it
                        more information that is available to                           is imperative for manufacturers to
                        support a good market outcome, the                              proactively plan and integrate the
                        more attractive partnerships and                                necessary value measurement into the
                        acquisitions will be.                                           latter stages of clinical development in
                           Clinical endpoints that are used in                          order to optimize market access and
                        Phase II trials are often mirrored and                          commercial viability of the product.
                        expanded in Phase III trials. In order to                       Table 3 shows the questions that must be
                        optimize the value proposition of a                             considered prior initiation of Phase II
                        compound, the manufacturer must                                 (Opportunity Identification) trials:
                        develop a thorough understanding of the
                        expectations of key stakeholders, including                     PHASE III: LAUNCH
                        those related to managed markets.                               PLANNING AND GLOBAL
                        Although a particular endpoint may be                           PRICING AND MARKET
                        clinically significant, if it does not resonate                  ACCESS (P&MA)
                        with managed market key stakeholders,                           Phase III trials determine how the
                        the product could ultimately have market                        compound measures up to the current
                        access issues that make it a less desirable                     treatment armamentarium. Often called
                        compound for development.9 For                                  pivotal or comparative trials, Phase III
                        example, a manufacturer developing a                            trials involve a large number of patients
                        novel therapy for rheumatoid arthritis,                         and consequently make up the largest
                        which has a costly and crowded existing                         portion of drug development costs. It is
                        market, will not only need to understand                        estimated that 40 per cent of Phase III
                        how key stakeholders measure efficacy,                           clinical trials fail.10 Of those failed trials,
                        but also need to determine what their                           30 per cent fail due to an inability to
                        expectations are for most appropriate                           demonstrate efficacy, while another 30 per
                        comparators. Furthermore, the                                   cent fail due to toxicity issues, further




20                      © 2010 Macmillan Publishers Ltd. 1745-7904   Journal of Medical Marketing Vol. 10, 1, 15–23
Roadmap to reimbursement and access



underscoring the value and importance of                        Table 4: Key questions for consideration – ‘Launch
                                                                Planning & Global P&MA’
Phase II trial design.11 Although Phase III
trials mostly serve in a confirmatory                            What is the ‘value’ proposition to payers?
                                                                What is optimal pricing and reimbursement strategy?
capacity to validate and expand upon the                        How wide is the price variance across markets?
outcomes of earlier phase trials, they                          What is the launch sequence across major markets?
ultimately determine the success or failure                     What are the primary drivers that influence the pricing
                                                                  corridor?
of a compound.                                                  How have we maximized synergy for United States
   The outcomes of Phase III trials will be                       and ex-US markets?
                                                                What are the key resources, timelines and budgets for
used to construct the compound’s clinical                         development of key Pricing and Reimbursement,
and economic value propositions. The                              HEOR and market access milestones?
manufacturer must focus on development
of the value proposition, which will                            in the trial design in order to optimize
ultimately influence the pricing,                                the value proposition of the compound.
reimbursement and marketing strategies                          To design an effective pricing strategy,
for the compound. An incorrect or                               a manufacturer must consider all of the
inappropriate selection of comparator(s) or                     nuances and differences in expectation in
clinical endpoints may lead to irreparable                      their clinical trial design.12
damage to the product’s value proposition                          In considering these variables, it will be
and consequently the product’s                                  important to incorporate vital pre-launch
commercial viability. However, the                              planning activities to uncover and
selection of the appropriate comparator                         maximize the product’s commercial
may be challenging due to geographic                            potential. Some critical activities include:
differences in what the appropriate                             development of value messages and global
comparator should be. This may be                               value dossier development; pricing studies
particularly challenging in ex-US markets                       and modeling; contracting intelligence and
where expectations for clinical endpoints,                      pricing and reimbursement negotiation
pricing and clinical comparators may differ                     tools; global payer segmentation and payer
significantly among the respective markets.                      advisory boards; and value drivers and
Consequently, manufacturers must                                launch sequencing for each target market.
consider the unique requirements and                            Table 4 shows the questions that must be
expectations for the markets where the                          considered before initiation and execution
product will be launched.                                       of launch planning.
   Similarly, Phase III trials will have a
fundamental impact on manufacturers that                        PHASE IV: POST LAUNCH
intend to launch their product in more                          AND LIFE CYCLE
than one market. Although expectations for                      MANAGEMENT
outcomes of Phase III trials have a number                      Based on the complexities and the failure
of similarities, specifically proof                              rate of gaining approval for a New
of safety and efficacy, a number of                              Molecular Entity, most manufacturers
differences exist even among neighboring                        have allocated significant resources toward
markets. Secondary endpoints such as                            expanding the utilization of their
quality of life and site of care can have an                    marketed compounds. There are several
integral impact on reimbursement and                            means that manufacturers have at their
market access for a product in one market,                      disposal to maximize and expand the
while having minimal to no impact in                            revenues generated by their marketed
other markets. Consequently, manufacturers                      products. Expanding an indication of a
must be cognizant of the differences in                         marketed product is one of the most
expectations, and factor in those differences                   frequently used approaches. In 2004,




© 2010 Macmillan Publishers Ltd. 1745-7904   Journal of Medical Marketing Vol. 10, 1, 15–23                        21
Greenapple et al



                        over 80 per cent of the top-selling drugs                       a new formulation of an existing product.
                        sought and attained approval for an                             Unlike the addition of a new indication,
                        indication post-launch. The approval of                         which leverages the product’s intrinsic
                        an additional indication enables the                            attributes, and consequently is not
                        manufacturer to gain access to a new                            typically heavily scrutinized, introduction
                        market without having to go through the                         of a novel formulation of an existing
                        entire development process. While some                          product often faces significant scrutiny
                        manufacturers carefully craft their patent                      from payers. Payers are hesitant to pay
                        extension strategies, others must develop                       more for just a novel formulation unless
                        them out of necessity.13                                        it offers some concrete benefits and are
                           A number of manufacturers have                               looking specifically for improved
                        launched products that fell short of                            outcomes.13
                        expectations, or failed to get approval                            Another patent life-extending option
                        in the targeted indication. Consequently,                       is the development of a Fixed Dose
                        manufacturers have had to develop a                             Combination (FDC) product. Similar to
                        strategy to target another indication and                       novel formulations of existing products,
                        reposition the product. This scenario                           FDCs using existing or available products
                        emphasizes the importance and value                             can provide a tremendous opportunity and
                        of planning and gaining a thorough                              expanded revenue stream, if the product’s
                        understanding of the value proposition                          clinical and economic value drivers are
                        during the early stages of product                              relevant to managed market stakeholders.
                        development. For example, bupropion                             In order for an FDC to be effective, it
                        hydrochloride (Wellbutrin) that was                             must add incremental value beyond the
                        initially commercialized by Glaxo                               offering of the individual components.
                        Smithkline (GSK) as an antidepressant,                          Payers will generally disfavor FDC
                        subsequently became available under the                         products that do not offer any incremental
                        brand name Zyban™ as a smoking                                  value beyond convenience while charging
                        cessation agent. GSK’s experience with                          a premium over the individual
                        bupropion hydrochloride emphasize the                           components. For example, GSK’s
                        importance of developing a thorough                             Advair™ is a FDC that has been far more
                        understanding of the molecule’s                                 successful than the individual components
                        commercial potential in the early part                          that make up the combination. By
                        of clinical development. However,                               offering both anti-inflammatory and
                        manufacturers must be cognizant of some                         bronchodialatory activity, Advair was able
                        of the complexities that may arise from                         to offer a distinct advantage that directly
                        seeking an additional indication. Using                         translated into improved outcomes and
                        the same molecule for a new indication                          consequently resulted in preferred access
                        may require changes in formulation                              and utilization in most plans.13
                        and/or dosing, which may impact the                                Conversely, Pfizer’s Caduet™, which is a
                        product’s P&MA. Consequently, all of the                        FDC of two products that will become
                        aforementioned factors must be considered                       available in generic form in the near future,
                        in early phases of development in order to                      has failed to meet expectations. The
                        optimize the commercial opportunity of a                        individual products’ (Lipitor™ and
                        novel pipeline entity.                                          Norvasc™) combined sales exceeded $18
                           Another approach used by                                     billion in 2006, while the FDC attained
                        manufacturers to optimize the life and                          annual sales of $274 million in 2006. This
                        revenue generating capacity of their                            can be attributed directly to a lack of
                        marketed products is via introduction of                        perceived value from a payers perspective.




22                      © 2010 Macmillan Publishers Ltd. 1745-7904   Journal of Medical Marketing Vol. 10, 1, 15–23
Roadmap to reimbursement and access



Table 5: Key questions for consideration – ‘Post                exceed $800 million to bring a new drug
Launch & Life cycle Management’
                                                                to market, it is essential to make the
Have we provided clinical, marketing and account                commitment to allocate the necessary
  management with consistent Pricing and Market
  Access (P&MA) messaging and tools?
                                                                resources in order to be able to develop a
How are we continuing to differentiate in the market            ‘roadmap’ that will identify the impact of
  place to maintain and enhance access?                         market access and pricing factors at each
What materials exist to handle P&MA objections?
What impact is the competition placing on pricing and           phase of product development. This will
  reimbursement?                                                increase the likelihood of success
What are regional/local barriers to market access?
What product changes could trigger new price/                   throughout the product development
  reimbursement negotiation or submission?                      process and enable manufacturers to
                                                                optimize their investment.

Early analysis of the payer market                              REFERENCES AND NOTES
expectations could have identified these                          1 Blum, J. (2008) Specialty medicines led rebound in
hurdles earlier in development and provided                        US drug approvals in 2008. Bloomberg [Online] Jan
                                                                   2009, http://www.bloomberg.com, accessed
insights as to how the compound could
                                                                   5 October 2009.
have achieved better payer acceptance. The                       2 David, E., Tramontin, T. and Zemmel, R. (2009)
key stakeholders did not perceive that                             Pharmaceutical R&D: The road to positive returns.
Caduet offered any incremental value over                          Nature Reviews Drug Discovery 8: 609–610.
                                                                 3 Medco. (2009) Medco Drug Trend Report [Online],
the individual components to warrant a                             http://medco.mediaroom.com/, accessed 2 October
premium price, consequently the product                            2009.
was disadvantage in most plans and has seen                      4 Schachter, A. (2007) Economic evaluation of Bayesian
                                                                   model to predict late-phase success of new chemical
limited uptake.13                                                  entities. Value in Health 10: 377–385.
    In this phase, the manufacturer must                         5 Nagle, T. (2007) Thoughtleader: Thomas Nagle.
ensure successful and flawless                                      Pharmaceutical Representative [Online]. May 2007,
                                                                   http://pharmexec.findpharma.com/, accessed
implementation of the product launch or
                                                                   5 October 2009.
life cycle management strategies. These                          6 Henry J. Kaiser family foundation. (2009) Medicare
strategies must incorporate communication                          Part D Data 2009 Data Spotlight: Specialty Tiers.
tactics including: global value slide kits                         [Online]. June 2009, http://www.kff.org/, accessed
                                                                   2 October 2009.
and proposition brochures; payer/HEOR                            7 Code of Federal Regulations. (2009) Title 21, Vol. 5.,
publications, training tools, patient                              Revised as of 1 April 2009.
advocacy materials and pull-through                              8 Chin, J.Y. (2004) The clinical side: Clinical trials take
                                                                   drugs from the lab to the bedside. Pharmaceutical
activities; as well as health outcomes                             Representative [Online]. 2004; [2 screens], http://
tactics including: global Pricing and                              license.icopyright.net/user/viewFreeUse.act?fuid=NT
Reimbursement/HEOR value dossier;                                  EzMjg3Ng%3D%3D, accessed 2 October 2009.
                                                                 9 Ratain, M.J. and Sargent, D.J. (2009) Optimising the
cost effectiveness and budget impact
                                                                   design of phase II oncology trials: The importance of
models; global database and registry                               randomization. European Journal of Cancer 45: 275–280.
studies; and global pricing research and                        10 Collier, R. (2009) Drug development cost estimates
real-world data analysis. Table 5 shows                            hard to swallow. Canadian Medical Association Journal
                                                                   180(3): 279–280.
the questions that must be considered                           11 Yue, C., Colucci, P. and Ducharme, M. (2009) Stop
before development of post-launch and                              costly phase III failures. Applied Clinical Trials [Serial
life cycle management strategies.                                  on the Internet] 18(6): 4–6, Available from: Academic
                                                                   Search Premier, accessed 2 October 2009.
                                                                12 Optimal launch sequence for pharmaceuticals within
CONCLUSION                                                         the EU. M.C. Gouy Consulting GmbH 2000 May:
There is a considerable amount of due                              1–6.
                                                                13 Sandner, P. and Ziegelbauer, K. (2008) Product-
diligence and analysis that goes into every
                                                                   related research: How research can contribute to
phase of development for a ‘successfully’                          successful life-cycle management. Drug Discovery Today
marketed product. Given that costs can                             13(9/10): 457–463.




© 2010 Macmillan Publishers Ltd. 1745-7904   Journal of Medical Marketing Vol. 10, 1, 15–23                               23

More Related Content

PDF
Market access the challenges for medical devices
PPTX
Medical Device Market Access: Optimising Medical Device and Diagnostic Launch...
PDF
Market Access - Getting ready for Personalized Medicine!
PPTX
Business model canvas-Hetero Healthcare Ltd(Pharmaceutical Company)
PPTX
Design for reimbursement in medical device development
PPT
Future of Market Access – a Pharma Perspective
PDF
Market Access, Pricing and Reimbursement streamlined
PDF
Future Pharma Trends - Long-term opportunities tempered by short-term challenges
Market access the challenges for medical devices
Medical Device Market Access: Optimising Medical Device and Diagnostic Launch...
Market Access - Getting ready for Personalized Medicine!
Business model canvas-Hetero Healthcare Ltd(Pharmaceutical Company)
Design for reimbursement in medical device development
Future of Market Access – a Pharma Perspective
Market Access, Pricing and Reimbursement streamlined
Future Pharma Trends - Long-term opportunities tempered by short-term challenges

What's hot (20)

PDF
2011_10_20_slide-deck_AZ_SB6
PDF
EU Market Overview Parson Q1 Dec 2010
PPT
The Future of Market Access – The Patient Picture
PDF
Hetero Europe company presentation 2010
DOCX
Contract research organization services (cr os) market
PDF
Regenerative Medicine Industry Outlook 2014
PDF
2010JanFeb PharmaceuticalMarketingEurope Feature Iftheshoefits
PDF
Market access medical devices-white paper
PDF
2011June PharmaceuticalMarketEurope ValuableCollection
PPTX
"Breaking up pharma´s value chain - what can we expect", MICHAEL MÜLLER
PDF
Global regenerative medicines market (technology, application and geography) ...
PPT
Social media presentation Amanda Ha
PDF
Pharma Pricing & Market Access
PDF
Mercer Capital's Value Focus: Medical Device Manufacturers | Q4 2015 | Five T...
PDF
Health Policy Supporting Innovation in Korean Medical Device Sector (July 11,...
PDF
Outlook 2011 presentation
PPT
Critical Success Factors for a Medical Device Company
PPT
How does the licensing process differ for in-licensing and out-licensing comp...
PDF
Regenerative medicine scotland v2
PDF
Understanding pharmaceutical value_chain
2011_10_20_slide-deck_AZ_SB6
EU Market Overview Parson Q1 Dec 2010
The Future of Market Access – The Patient Picture
Hetero Europe company presentation 2010
Contract research organization services (cr os) market
Regenerative Medicine Industry Outlook 2014
2010JanFeb PharmaceuticalMarketingEurope Feature Iftheshoefits
Market access medical devices-white paper
2011June PharmaceuticalMarketEurope ValuableCollection
"Breaking up pharma´s value chain - what can we expect", MICHAEL MÜLLER
Global regenerative medicines market (technology, application and geography) ...
Social media presentation Amanda Ha
Pharma Pricing & Market Access
Mercer Capital's Value Focus: Medical Device Manufacturers | Q4 2015 | Five T...
Health Policy Supporting Innovation in Korean Medical Device Sector (July 11,...
Outlook 2011 presentation
Critical Success Factors for a Medical Device Company
How does the licensing process differ for in-licensing and out-licensing comp...
Regenerative medicine scotland v2
Understanding pharmaceutical value_chain
Ad

Viewers also liked (7)

PPT
Medicare's Reimbursement System for Devices
PPT
Medical Cost Reimbursement of Medical Devices
PPTX
Marketing Strategy for a medical device company
PDF
Market access medical devices white paper
PPTX
Marketing Strategy for Medical Device Company
PPTX
Marketing for Medical Device Startups
PPTX
Medical device Industry 2015
Medicare's Reimbursement System for Devices
Medical Cost Reimbursement of Medical Devices
Marketing Strategy for a medical device company
Market access medical devices white paper
Marketing Strategy for Medical Device Company
Marketing for Medical Device Startups
Medical device Industry 2015
Ad

Similar to Roadmap to reimbursement and access (20)

PDF
EIU Value Challenge
PPTX
New Health Report 2012 - Media Briefing Deck
PDF
21st Century Pharma
PDF
Inc Alliances Whitepaper
PDF
Commercial considerations in early drug development
PDF
Macrogenics Equity Research Report
PPTX
Challenges for drug development jsr slides aug 2013
PDF
eye of the storm
PDF
Post Marketing Clinical Research & Marketing Strategy
PDF
Bru msmpp wp_feb2012_pharma_2
PDF
Drug Discovery, Development and Commercialization
PDF
R&D leadership in crisis: rebuilding innovation through people
PPTX
New Product Planning in the Pharmaceutical Industry
PDF
GetPersonalized! Pharma's perspective on the future, Claudia Karnbach
PDF
Quality Creates Value: Unlocking Quality Culture as a Competitive Edge in the...
PDF
Real World Data - The New Currency in Healthcare
PDF
Real World Evidence Industry Snapshot
DOC
Health Care Reform Revised V2
PDF
Integrity driven performance in the pharmaceutical industry
PDF
Emerging Pharma Business & Operational Models
EIU Value Challenge
New Health Report 2012 - Media Briefing Deck
21st Century Pharma
Inc Alliances Whitepaper
Commercial considerations in early drug development
Macrogenics Equity Research Report
Challenges for drug development jsr slides aug 2013
eye of the storm
Post Marketing Clinical Research & Marketing Strategy
Bru msmpp wp_feb2012_pharma_2
Drug Discovery, Development and Commercialization
R&D leadership in crisis: rebuilding innovation through people
New Product Planning in the Pharmaceutical Industry
GetPersonalized! Pharma's perspective on the future, Claudia Karnbach
Quality Creates Value: Unlocking Quality Culture as a Competitive Edge in the...
Real World Data - The New Currency in Healthcare
Real World Evidence Industry Snapshot
Health Care Reform Revised V2
Integrity driven performance in the pharmaceutical industry
Emerging Pharma Business & Operational Models

More from Rhonda Greenapple (14)

PDF
View Points: Could Pfizer\'s tofacitinib beat expectation and gain approval ...
PDF
AHDB_Payers Collaborate with Providers To Adopt Oncology Pathways, New Care D...
PDF
First Word Pharma View Points Commercial Prospects In The Obesity Market ...
PDF
Analysis: Drug Costs Become Bigger Issue In Cancer Care
PDF
Looking beyond Plavix for evidence of Lipitor-type post-expiry strategies
PDF
Spotlight On: Looking beyond Plavix for evidence of Lipitor type post expiry ...
PDF
Payers likely to throw up hurdles to Pfizer\'s new RA drug
PDF
How Payers View Pfizer\'s Rheumatoid Arthritis Pill
PDF
Why Pfizers Rheumatoid Arthritis Pill May Not Be A Sure Bet
PDF
Pfizer’s Rheumatoid Arthritis Pill Not A Slam Dunk
PDF
Pfizer Tactics To Combat Generic Drugmakers Financial Times Dec 5, 2011
PDF
Review Of Strategies To Enhance Outcomes For Patients With Type 2 Diabets
PDF
Vbcc Aco Article
PDF
Obesity: Effective Treatment Requires Change in Payers\' Perspective
View Points: Could Pfizer\'s tofacitinib beat expectation and gain approval ...
AHDB_Payers Collaborate with Providers To Adopt Oncology Pathways, New Care D...
First Word Pharma View Points Commercial Prospects In The Obesity Market ...
Analysis: Drug Costs Become Bigger Issue In Cancer Care
Looking beyond Plavix for evidence of Lipitor-type post-expiry strategies
Spotlight On: Looking beyond Plavix for evidence of Lipitor type post expiry ...
Payers likely to throw up hurdles to Pfizer\'s new RA drug
How Payers View Pfizer\'s Rheumatoid Arthritis Pill
Why Pfizers Rheumatoid Arthritis Pill May Not Be A Sure Bet
Pfizer’s Rheumatoid Arthritis Pill Not A Slam Dunk
Pfizer Tactics To Combat Generic Drugmakers Financial Times Dec 5, 2011
Review Of Strategies To Enhance Outcomes For Patients With Type 2 Diabets
Vbcc Aco Article
Obesity: Effective Treatment Requires Change in Payers\' Perspective

Roadmap to reimbursement and access

  • 1. Original Article Roadmap to reimbursement and access Received (in revised form): 23rd December 2009 Rhonda Greenapple is President of Reimbursement Intelligence. She spent her career focused on gaining access and reimbursement for her clients. Her clients’ products have ranged from unique chemical entities to highly competitive therapeutic categories. Reimbursement Intelligence was founded to serve her desire to focus strictly on biologics and emerging technology and the payer factors that can influence commercial success. Over the past 15 years, she has been involved in the reimbursement launch planning for over 40 products. She has spoken at professional meets both domestically and internationally on a range of topics including Reimbursement Due Diligence for investors and emerging biotech companies, and Medicare Part D drug benefit trends. She is a columnist in Fierce Pharma Industry Voices on reimbursement trends and has published in Managed Care Magazine, American Health and Drug Benefits and Oncology News International. Greenapple received her BS from Cornell University and received her Master’s of Science in Public Health from the University of North Carolina. Julie Schachter is Vice President of Strategic Planning. She is responsible for developing managed market strategies and business planning and is the head of Research and Analytics at Reimbursement Intelligence. As the head of the research team, Schachter is responsible for proprietary syndicated surveys as well as all client-driven research conducted in both the United States and European payer markets. She has more than 10 years of experience in the pharmaceutical industry and has successfully launched pharmaceutical drugs and medical devices in various categories. Before working at Reimbursement Intelligence, Schachter worked at Bayer Healthcare and Novartis Pharmaceuticals in both Product and Marketing Management positions and was key to the launch of several unique products in the United States. She also worked as a private consultant with several biotechnology and life science companies on product and disease management initiatives. Schachter received her bachelor degree from University of Delaware and is an MBA candidate at Seton Hall University. Maxim Miller is Manager of Market Research and Analytics. He leads the Reimbursement Intelligence research and analytics team to deliver strategic recommendations for pharmaceutical, biotech and device manufactures. With over 10 years of reimbursement and access consulting. Miller is sought by emerging biotech as well as top 10 pharmaceutical companies. He has conducted diabetes landscape research in multiple therapeutic categories. Previously, Miller worked as an analyst at both Campbell Alliance and PriceSpective LLC. He received his BS in Marketing/International Business from Drexel University and is an MBA candidate at the Temple University – Fox School of Business. ABSTRACT The article evaluates the recent challenges faced by the pharmaceutical industry and the impact of those challenges on the product development process. Upon identification of key hurdles faced by the pharmaceutical companies during the development process, the article proposes solutions that may help to optimize the commercial opportunity of select pharmaceutical products. Although the clinical perspective is addressed, the focus of the article is on the economic perspective; specifically, strategies that pharmaceutical manufacturers can employ to maximize access and commercial viability of their pipeline products. Journal of Medical Marketing (2010) 10, 15–23. doi:10.1057/jmm.2010.1 Keywords: pharmaceutical product value assessment; pharmaceutical product drug development process; life cycle management Correspondence: Rhonda Greenapple Reimbursement Intelligence, BACKGROUND cost to bring a drug to market continues 2 Shunpike Rd., 3rd Floor, In 2008, the Federal Drug Administration to rise along with an increase in the Madison, NJ 07940, US E-mail: rgreenapple@ (FDA) approved 25 novel treatments, an failure rate as products progress through reimbursementintelligence .com increase from 19 the previous year.1 The the development process. Currently, there © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23 www.palgrave-journals.com/jmm/
  • 2. Greenapple et al are approximately 2000 drugs in various significant resources into development of stages of clinical development. novel drugs, they must be cognizant of Approximately one quarter of the drugs the importance of incorporating the are in Phase II/III or Phase III clinical economic value proposition of their trials. Although the rate of approval pipeline products into the overall value improved moderately from 2007 to 2008, proposition. Currently, the pharmaceutical the overwhelming majority of pipeline industry faces significant uncertainty as products are never brought to market as legislators attempt to address the rising costs evidenced by the numbers of agents in the of health care. Consequently, the economic pipeline versus those that received FDA value proposition may become as important approval.2 Furthermore, the cost of as the clinical profile. Historically, development is an integral component in manufacturers focused on the clinical the selection process of which molecules profile of pipeline products and the will be chosen to progress through the economic value proposition was often a development process.3 The conservative secondary concern. However, as cost- estimated cost of developing a single New effectiveness gains traction as one of key Chemical Entity exceeds US $800 million components of a drug’s value proposition, with clinical costs comprising over $400 the manufacturers will have to learn to million of the overall cost. A substantial identify as well as effectively communicate portion of the development costs is their product’s economic value story. Most derived from late-stage clinical trials. importantly, given the cost of development, Given that over 60 per cent of trials are the expectations for identification and terminated during late-stage development, understanding of a product’s economic this is an area of concern for the health value story may be required earlier in the care industry as a whole due to the development process. This article will resources that are wasted by the failed identify key considerations along the trials. Phase III trials are typically the development pathway, as well as offer costliest due to the number of patients actionable strategies that will serve to assist involved in the trial, typically in the the manufacturers in optimizing their thousands, and can cost tens or even product offering’s economic value story.5 hundreds of millions of dollars to conduct. Consequently, high costs associated with late-stage clinical trials emphasize OBJECTIVES the importance of minimizing commercialization risks while maximizing • Understand the key questions to shareholder value. Furthermore, the ask regarding access and reimbursement emphasis to minimize costs extends to at key product lifecycle milestones. molecules that fail during late-stage • Identify opportunities and challenges clinical trials, as well as those that are in private and government health brought to market. Those products that plans that can impact commercial reach the market are burdened to recoup success. the resources invested in the molecule • Integrate reimbursement and health during clinical development.4 outcomes activities throughout the This article will examine potential commercial planning process. strategies and methodologies that • Ensure continuous monitoring of manufacturers can employ in order to the entire managed markets maximize the commercial success of their landscape that can impact access and product portfolio. As manufacturers invest reimbursement. 16 © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23
  • 3. Roadmap to reimbursement and access METHODOLOGY PHASE I: PROOF OF This article will review four critical steps CONCEPT in product development: Proof of The high cost of product development Concept, Opportunity Identification, coupled with poor economic conditions Pre-launch Planning and Post-launch makes it vital for manufacturers to be able and Life cycle Management. In addition, to efficiently and effectively identify reimbursement, health outcomes and products with the greatest potential for pricing activities, as well as key questions commercial success. Conducting a market for consideration at each stage will be landscape analysis during early phases of identified. product development can help to identify early clinical and economic scenario models that incorporate: the unmet INTRODUCTION medical needs in the category; the pricing In the current health-care landscape, and reimbursement of currently available there is greater scrutiny paid to products and how they are managed; expensive biotech products in an clinical and economic profiles; which environment where biologics represent Health Economics Outcomes Research 30 per cent of the cost of cancer (HEOR) and clinical endpoints will be treatment 3 and are evolving into a key required; and ultimately gauge the component of many therapeutic product’s commercial viability. treatment algorithms. Health plans, both In oncology, for example, there are government and private, are attempting more than 850 agents in development.3 to ensure appropriate access and For a new oncolytic agent in the proof utilization of costly biologics via of concept stage, the first step will be to implementation of management tools determine whether the product can meet such as: prior authorization, step edits, an unmet need versus current or future quantity limits, genetic testing, lockouts, competitors. In a recent survey regarding exclusions, and formulary management. key tumor types (Figure 2), Additionally, a number of health plans, Reimbursement Intelligence asked 60 public and private, have also altered Medical and Pharmacy Directors from their benefit design to include a private and commercial health plans, specialty tier that often requires the which tumor types they perceived to have patient to pay a co-insurance for use of the greatest unmet need for new cancer injectable and biologic products, with therapies. The report also assessed the the member paying anywhere from impact of select clinical and HEOR 10–40 per cent of the cost of the drug endpoints that novel oncology therapies (Figure 1(a) and 1(b)).6 will be expected to achieve in order to Health outcomes data becomes even demonstrate incremental value over more important for costly biologics, as the current standard of care. This type of Centers for Medicare and Medicaid analysis is the crucial first step in ensuring (CMS) and private health plans are that resources are allocated appropriately considering comparative effectiveness in R&D efforts. analysis and lowest cost alternative when Another trend in the current health- creating their product formularies. In care environment is the increase in 505 order to maintain access and utilization, (2)(b) products introduced into the manufacturers must be able to demonstrate market. The 505 (2)(b) process allows for cost effectiveness and the product’s impact a faster development time without the on the total cost of care. need for extensive clinical trials. Generally, © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23 17
  • 4. Greenapple et al 505 (2)(b) products are generic products generic with many iterations introduced that have new delivery systems, a under the 505 (2)(b) path, that utilizes formulation change or a novel dosing novel delivery mechanisms. Table 1 shows regimen that allow them to have an three migraine medications that used the abbreviated New Drug Application. 505 (2)(b) pathway to launch products The FDA allows the manufacturers to derived from the same ingredient use safety and efficacy data already in the (sumaptriptan).7 public domain thereby eliminating the In these examples, the primary market need to conduct trials that would landscape analysis should focus on the demonstrate safety and efficacy.7 current and future (2 years out) markets, The 505 (2)(b) path allows companies including an analysis to determine if to shorten the development times and payers perceive the new delivery significantly lower R&D costs. For mechanism to offer any tangible example, the migraine product Imitrex improvements in health outcomes. (sumatriptan) provides an example of a Without concrete improvements in health 2006 2007 2008 2009 96% 98% 93% 92% 87% 88% 82% 69% Stand-alone Prescription Drug Plans Medicare Advantage Drug Plans 50% 48% 55% 57% Coinsurance rates: 33% 5% 10% 26%-30% 4% 6% 25% <25% 45% 39% 39% 37% 3% 2% 2008 2009 2008 2009 PDP's MA-PD plans Figure 1: (a) Share of enrollment in Medicare Part D plans with tiered cost sharing using specialty tiers, 2006–2009; and (b) Share of enrollment in Medicare Part D plans with specialty tiers, by specialty tier co-insurance rate, 2008–2009. Source: Georgetown/NORC analysis of data from CMS for PedPAC and the Kaiser Family Foundation and Henry J. Kaiser Family Foundation. Notes: (a) Estimates weighted by enrollment in each year; and (b) Estimates weighted by enrollment in each year. Analysis excludes small share of plans with copayments for specialty tiers (0.1% of PDPs and 2% of MA-PD plans). Analysis of MA-PD plans excludes Special Needs Plans. 18 © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23
  • 5. Roadmap to reimbursement and access 10 9.6 10 9.2 8.9 9 8 6.9 6.6 7 6.2 6.1 5.8 5.7 5.5 6 5.4 5.4 5 4 3 2 1 0 10 = Ranked Greatest Unmet Need, 1= Ranked Lowest Figure 2: Payers perception of unmet need for new treatment options. Table 1: Migraine medications that used the 505 Table 2: Key questions for consideration – ‘Proof of (2)(b) pathway to launch products derived from the Concept’ same ingredient (sumatriptan) Does this product meet an unmet need versus current Brand Delivery Manufacturer or future market entrants? Who are the key stakeholders, and what is their Sumavel™ Needle-free Zogenix involvement in managing the disease and treatment DosePro™ delivery pathways? (sumatriptan system How are payers managing the disease and injection) therapeutic category? Zelrix™ Transdermal NuPathe What is the commercial viability? (sumatriptan patch What HEOR/Patient Reported Outcomes (PRO) transdermal have been used in this indication? patch) Which HEOR/PRO endpoints will need to be Levadex™ Oral inhaled MAP developed and tested during Phase II of clinical (sumatriptan Pharmaceuticals development to optimize market access? oral inhaled) What product attributes will be important in this category? outcomes, the overall value proposition of PHASE II: OPPORTUNITY the product may not be enhanced, and in IDENTIFICATION some instances it may be diminished. Phase II clinical trials play an integral role With no perceived ‘value’ the 505 (2)(b) in determining the ultimate success or product will likely be disadvantaged in demise of a product. After Phase I trials health plans that have implemented establish the ‘proof of concept’, Phase II generic first formularies designed to trials build upon the outcomes of Phase I transition patients from branded to generic trials and further test the molecular drugs. Conducting comprehensive due entity’s safety and efficacy. Furthermore, diligence at this early stage can help to well-designed and executed Phase II trials ensure that the value proposition resonates should enable the manufacturer to make with the appropriate stakeholders. Table 2 the go or no-go decision regarding shows the questions that must be progression to Phase III trials. Phase III considered before commencement of trials often require several years to proof of concept trials. complete, and can cost tens or even © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23 19
  • 6. Greenapple et al hundreds of millions of dollars. Table 3: Key questions for consideration – ‘Opportunity Identification’ Consequently, manufacturers rely upon the outcomes of Phase II trials to inform What PRO endpoints should be included in our clinical trials? and offer guidance for the largest Does the clinical program enhance the value investment they have to make during the proposition? Are the endpoints correct comparators, and is the development process.8 subpopulation in the Phase II studies relevant for Beyond the financial pressures associated market release? with Phase II trials, Phase II trials Is there a need to undertake burden of illness studies to support value proposition and market building generally unveil the product’s clinical and positioning activities? profile, and consequently initiate the What is the optimal pricing band, based on expected levels of effectiveness, physician and payer development of the compound’s value perception and pricing research? proposition. These early data provide enough information to begin gauging success factors for the product, assuming manufacturer should also seek to the trials result in clinical significance. understand if the proposed Target Product Other market factors, including pricing Profile has clinical and economic scenario planning and price sensitivity relevance for payers across all target analysis, economic modeling, value markets. Although it may seem too early proposition validation and payer evidence at this phase of development to analyze requirements, are especially important for these market factors, it could ultimately manufacturers considering exit strategies save a manufacturer millions of dollars and for their compound in development. The thousands of man hours. Consequently, it more information that is available to is imperative for manufacturers to support a good market outcome, the proactively plan and integrate the more attractive partnerships and necessary value measurement into the acquisitions will be. latter stages of clinical development in Clinical endpoints that are used in order to optimize market access and Phase II trials are often mirrored and commercial viability of the product. expanded in Phase III trials. In order to Table 3 shows the questions that must be optimize the value proposition of a considered prior initiation of Phase II compound, the manufacturer must (Opportunity Identification) trials: develop a thorough understanding of the expectations of key stakeholders, including PHASE III: LAUNCH those related to managed markets. PLANNING AND GLOBAL Although a particular endpoint may be PRICING AND MARKET clinically significant, if it does not resonate ACCESS (P&MA) with managed market key stakeholders, Phase III trials determine how the the product could ultimately have market compound measures up to the current access issues that make it a less desirable treatment armamentarium. Often called compound for development.9 For pivotal or comparative trials, Phase III example, a manufacturer developing a trials involve a large number of patients novel therapy for rheumatoid arthritis, and consequently make up the largest which has a costly and crowded existing portion of drug development costs. It is market, will not only need to understand estimated that 40 per cent of Phase III how key stakeholders measure efficacy, clinical trials fail.10 Of those failed trials, but also need to determine what their 30 per cent fail due to an inability to expectations are for most appropriate demonstrate efficacy, while another 30 per comparators. Furthermore, the cent fail due to toxicity issues, further 20 © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23
  • 7. Roadmap to reimbursement and access underscoring the value and importance of Table 4: Key questions for consideration – ‘Launch Planning & Global P&MA’ Phase II trial design.11 Although Phase III trials mostly serve in a confirmatory What is the ‘value’ proposition to payers? What is optimal pricing and reimbursement strategy? capacity to validate and expand upon the How wide is the price variance across markets? outcomes of earlier phase trials, they What is the launch sequence across major markets? ultimately determine the success or failure What are the primary drivers that influence the pricing corridor? of a compound. How have we maximized synergy for United States The outcomes of Phase III trials will be and ex-US markets? What are the key resources, timelines and budgets for used to construct the compound’s clinical development of key Pricing and Reimbursement, and economic value propositions. The HEOR and market access milestones? manufacturer must focus on development of the value proposition, which will in the trial design in order to optimize ultimately influence the pricing, the value proposition of the compound. reimbursement and marketing strategies To design an effective pricing strategy, for the compound. An incorrect or a manufacturer must consider all of the inappropriate selection of comparator(s) or nuances and differences in expectation in clinical endpoints may lead to irreparable their clinical trial design.12 damage to the product’s value proposition In considering these variables, it will be and consequently the product’s important to incorporate vital pre-launch commercial viability. However, the planning activities to uncover and selection of the appropriate comparator maximize the product’s commercial may be challenging due to geographic potential. Some critical activities include: differences in what the appropriate development of value messages and global comparator should be. This may be value dossier development; pricing studies particularly challenging in ex-US markets and modeling; contracting intelligence and where expectations for clinical endpoints, pricing and reimbursement negotiation pricing and clinical comparators may differ tools; global payer segmentation and payer significantly among the respective markets. advisory boards; and value drivers and Consequently, manufacturers must launch sequencing for each target market. consider the unique requirements and Table 4 shows the questions that must be expectations for the markets where the considered before initiation and execution product will be launched. of launch planning. Similarly, Phase III trials will have a fundamental impact on manufacturers that PHASE IV: POST LAUNCH intend to launch their product in more AND LIFE CYCLE than one market. Although expectations for MANAGEMENT outcomes of Phase III trials have a number Based on the complexities and the failure of similarities, specifically proof rate of gaining approval for a New of safety and efficacy, a number of Molecular Entity, most manufacturers differences exist even among neighboring have allocated significant resources toward markets. Secondary endpoints such as expanding the utilization of their quality of life and site of care can have an marketed compounds. There are several integral impact on reimbursement and means that manufacturers have at their market access for a product in one market, disposal to maximize and expand the while having minimal to no impact in revenues generated by their marketed other markets. Consequently, manufacturers products. Expanding an indication of a must be cognizant of the differences in marketed product is one of the most expectations, and factor in those differences frequently used approaches. In 2004, © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23 21
  • 8. Greenapple et al over 80 per cent of the top-selling drugs a new formulation of an existing product. sought and attained approval for an Unlike the addition of a new indication, indication post-launch. The approval of which leverages the product’s intrinsic an additional indication enables the attributes, and consequently is not manufacturer to gain access to a new typically heavily scrutinized, introduction market without having to go through the of a novel formulation of an existing entire development process. While some product often faces significant scrutiny manufacturers carefully craft their patent from payers. Payers are hesitant to pay extension strategies, others must develop more for just a novel formulation unless them out of necessity.13 it offers some concrete benefits and are A number of manufacturers have looking specifically for improved launched products that fell short of outcomes.13 expectations, or failed to get approval Another patent life-extending option in the targeted indication. Consequently, is the development of a Fixed Dose manufacturers have had to develop a Combination (FDC) product. Similar to strategy to target another indication and novel formulations of existing products, reposition the product. This scenario FDCs using existing or available products emphasizes the importance and value can provide a tremendous opportunity and of planning and gaining a thorough expanded revenue stream, if the product’s understanding of the value proposition clinical and economic value drivers are during the early stages of product relevant to managed market stakeholders. development. For example, bupropion In order for an FDC to be effective, it hydrochloride (Wellbutrin) that was must add incremental value beyond the initially commercialized by Glaxo offering of the individual components. Smithkline (GSK) as an antidepressant, Payers will generally disfavor FDC subsequently became available under the products that do not offer any incremental brand name Zyban™ as a smoking value beyond convenience while charging cessation agent. GSK’s experience with a premium over the individual bupropion hydrochloride emphasize the components. For example, GSK’s importance of developing a thorough Advair™ is a FDC that has been far more understanding of the molecule’s successful than the individual components commercial potential in the early part that make up the combination. By of clinical development. However, offering both anti-inflammatory and manufacturers must be cognizant of some bronchodialatory activity, Advair was able of the complexities that may arise from to offer a distinct advantage that directly seeking an additional indication. Using translated into improved outcomes and the same molecule for a new indication consequently resulted in preferred access may require changes in formulation and utilization in most plans.13 and/or dosing, which may impact the Conversely, Pfizer’s Caduet™, which is a product’s P&MA. Consequently, all of the FDC of two products that will become aforementioned factors must be considered available in generic form in the near future, in early phases of development in order to has failed to meet expectations. The optimize the commercial opportunity of a individual products’ (Lipitor™ and novel pipeline entity. Norvasc™) combined sales exceeded $18 Another approach used by billion in 2006, while the FDC attained manufacturers to optimize the life and annual sales of $274 million in 2006. This revenue generating capacity of their can be attributed directly to a lack of marketed products is via introduction of perceived value from a payers perspective. 22 © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23
  • 9. Roadmap to reimbursement and access Table 5: Key questions for consideration – ‘Post exceed $800 million to bring a new drug Launch & Life cycle Management’ to market, it is essential to make the Have we provided clinical, marketing and account commitment to allocate the necessary management with consistent Pricing and Market Access (P&MA) messaging and tools? resources in order to be able to develop a How are we continuing to differentiate in the market ‘roadmap’ that will identify the impact of place to maintain and enhance access? market access and pricing factors at each What materials exist to handle P&MA objections? What impact is the competition placing on pricing and phase of product development. This will reimbursement? increase the likelihood of success What are regional/local barriers to market access? What product changes could trigger new price/ throughout the product development reimbursement negotiation or submission? process and enable manufacturers to optimize their investment. Early analysis of the payer market REFERENCES AND NOTES expectations could have identified these 1 Blum, J. (2008) Specialty medicines led rebound in hurdles earlier in development and provided US drug approvals in 2008. Bloomberg [Online] Jan 2009, http://www.bloomberg.com, accessed insights as to how the compound could 5 October 2009. have achieved better payer acceptance. The 2 David, E., Tramontin, T. and Zemmel, R. (2009) key stakeholders did not perceive that Pharmaceutical R&D: The road to positive returns. Caduet offered any incremental value over Nature Reviews Drug Discovery 8: 609–610. 3 Medco. (2009) Medco Drug Trend Report [Online], the individual components to warrant a http://medco.mediaroom.com/, accessed 2 October premium price, consequently the product 2009. was disadvantage in most plans and has seen 4 Schachter, A. (2007) Economic evaluation of Bayesian model to predict late-phase success of new chemical limited uptake.13 entities. Value in Health 10: 377–385. In this phase, the manufacturer must 5 Nagle, T. (2007) Thoughtleader: Thomas Nagle. ensure successful and flawless Pharmaceutical Representative [Online]. May 2007, http://pharmexec.findpharma.com/, accessed implementation of the product launch or 5 October 2009. life cycle management strategies. These 6 Henry J. Kaiser family foundation. (2009) Medicare strategies must incorporate communication Part D Data 2009 Data Spotlight: Specialty Tiers. tactics including: global value slide kits [Online]. June 2009, http://www.kff.org/, accessed 2 October 2009. and proposition brochures; payer/HEOR 7 Code of Federal Regulations. (2009) Title 21, Vol. 5., publications, training tools, patient Revised as of 1 April 2009. advocacy materials and pull-through 8 Chin, J.Y. (2004) The clinical side: Clinical trials take drugs from the lab to the bedside. Pharmaceutical activities; as well as health outcomes Representative [Online]. 2004; [2 screens], http:// tactics including: global Pricing and license.icopyright.net/user/viewFreeUse.act?fuid=NT Reimbursement/HEOR value dossier; EzMjg3Ng%3D%3D, accessed 2 October 2009. 9 Ratain, M.J. and Sargent, D.J. (2009) Optimising the cost effectiveness and budget impact design of phase II oncology trials: The importance of models; global database and registry randomization. European Journal of Cancer 45: 275–280. studies; and global pricing research and 10 Collier, R. (2009) Drug development cost estimates real-world data analysis. Table 5 shows hard to swallow. Canadian Medical Association Journal 180(3): 279–280. the questions that must be considered 11 Yue, C., Colucci, P. and Ducharme, M. (2009) Stop before development of post-launch and costly phase III failures. Applied Clinical Trials [Serial life cycle management strategies. on the Internet] 18(6): 4–6, Available from: Academic Search Premier, accessed 2 October 2009. 12 Optimal launch sequence for pharmaceuticals within CONCLUSION the EU. M.C. Gouy Consulting GmbH 2000 May: There is a considerable amount of due 1–6. 13 Sandner, P. and Ziegelbauer, K. (2008) Product- diligence and analysis that goes into every related research: How research can contribute to phase of development for a ‘successfully’ successful life-cycle management. Drug Discovery Today marketed product. Given that costs can 13(9/10): 457–463. © 2010 Macmillan Publishers Ltd. 1745-7904 Journal of Medical Marketing Vol. 10, 1, 15–23 23