Pharma Market Dynamics Today, Tomorrow and Ten Years From Now: An Industry in Hyper Drive - William Roth & John Cervione - Blue Fin Group
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Pharma Market Dynamics Today, Tomorrow and Ten Years From Now: An Industry in Hyper Drive William Roth & John Cervione Blue Fin Group, an IntegriChain Company consultbfg.com
Presented by
Bill Roth John Cervione
General Manager & Managing Partner Managing Partner
AREAS OF FOCUS AREAS OF FOCUS
• Commercialization • FDA Submissions
• Business Model Development • New Product Launches
• Channel Strategy
• Market Access EDUCATION
• Oncology
Providence College
• Immunology
• Neurology • B.S., Finance with
concentration in
wroth@consultbfg.com jcervione@consultbfg.com Management
EDUCATION New York University, Stern
• B.S. in Business Administration – School of Business
St. Michael’s College • Master of Business
Administration
2 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
Addressing Entire Spectrum of Commercialization & Access
NDA/BLA PDUFA
FDA
Phase 2 Phase 3 Review Launch Maturity
Commercialization Market Access Execution
Stakeholder Map Contracting Product & Launch Consulting Rebate Management Inventory Analytics
Provider & Pharmacy Specialty Pharmacy Analytics
Pricing Reimbursement Consulting Government Pricing
Market Access & Payer GTN Accruals & Forecasts Claim Level Detail
Asset Evaluation Payer Ad Boards Consulting
Channel Consulting Channel & Patient GTN Analytics
Policy/Reimbursement Provider Ad Boards Data Aggregation
Patient Access & State Pricing Transparency
3PL Selection Affordability Consulting
Bl/Analytics
GP Methodology & SOPS
GTN Methodology & SOPS
GTN Modeling
Contracts & Pricing
Scenario Modeling
From innovative services to planning for generics and biosimilars…
3 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
…then understanding how product archetypes drive different product
strategies…
Precision, Gene
Orphan and Rare and Cell Therapy
Brand Generic Vaccine Specialty Generic Specialty Lite Specialty Biosimilar Disease (ORD) (GCT)
Small to Small to Very Small
Patient Base Very large Very large Very large Small to Medium Small to Medium Very Small
Medium Medium (
…leading to further product access complexities based on payer type,
payer policy and benefit design
.
Medical Benefit Medical Benefit Innovative
Pharmacy Benefit
(Buy&Bill) (DRG) Benefit Design
Managed by the Managed by the Health Managed by the Health
Managed by the PBM
Health Plan / MCO Plan/MCO and HMO Plan/MCO and HMO
Self-administrated from HCP administrated from HCP administered from Currently for hospital inpatient
outpatient outpatient inpatient (usually) and health systems
Retail Clinics Hospital Inpatient ACO model is an example
Mail Order Hospital Outpatient Dialysis centers PBMs trying their hand at
Value Based contracts
Specialty Pharmacy Home Infusion Services
Ambulatory Pharmacy Physician offices
5 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
So how do we start to unpack a vision for our industry to 2030?
1. Product Archetypes
Innovation is driving dramatically different
products, treatments, pricing and
corresponding access challenges
4. Channels 2. Health Care/Rx costs and
The hardest part of keeping it all Reform
straight is that we have a tendency The pressure being applied to
to listen to the market that have a industry is coming from the plan
siloed, subjective and self-serving sponsor with budgets hemorrhaging
view of the future and patients facing greater concern
about rising OOP impacts
3. Technology and Services
The use of technology from disease awareness to
prescribing to patient choice to education and support
will be enabling the evolution of the patient treatment
journey and ultimately outcomes
6 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
Regulators
If left on the same trajectory, premiums go from
$21,342 to $55,354 by 2030
Commercial
Single premiums are $7,740 and
family premiums are $21,342 for 2020
Premiums have grown an average of
10-12.75% for the 2010s
Medicare
Average Medicare OOP is ~ $5000
Average Part A – $1,408
Average Part B – $1,735
Average Part D – $571
Total Medicare Premiums ~ $3,714
8 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
Product Innovation is Out-pacing Insurance Design
Premiums increase from $22,000 to $55,000 by end of decade
Curative therapies did not seem to be modeled by actuaries
12.5% premium growth
While CMS is technically responsible for
Medicare and Medicaid, industry knows it
Medicare runs out of $ in 26’ supports commercial too
Continued product innovation Pressure on system
Powerbase of payers/systems
Vertical integration viewed by government as
delivering care at reasonable cost structures
Working for govt/private
Established a medical benefit construct that
dis-incents discounting of any form
9 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
Reform is highly likely – Government will need to intervene
ASP Flat ASP Inflation
CAP 2.0 IPI + CAP 2.0 OCM 2.0 Rebate Rule
Add-On Penalty
• Replace ASP + • Implements an • CMS contracts with • Three-part proposal • Would be an • Removal of safe
6% with a flat fee inflation penalty vendors to that pegs Medicare alternative to the harbor for Part D
add-on on Part B drugs negotiate prices onpayments closer to CMS OCM rebates delayed to
behalf of providersex-US prices and program 2023
• Could drive a shift • Penalty would be adds in elements of
in behavior for paid via a rebate • This program was CAP and the ASP
• Simplifies the • Removes safe
economically previously tried and original OCM harbor protection
• Peg would be to CPI, Flat Add-On
motivated failed due to poor model for Part D rebates;
range of 0.1% –
providers design • Focus on OPPS establishes new
3.2% over the last • Includes “carve-
and HOPD drugs safe harbor for
10y outs” that would
POS discounts to
allow the creation
patients
of true value-based
contracts • Establishes new
safe harbor for
administrative fees
to PBMs
10 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyPlan Sponsors
Patients
Prescribers
Prescriber Trends –
As more becomes digitized the prescribers lose, payers gain
Consumerisation Automation Consolidation
Industry is realizing that doctors As more data becomes available Horizontal and vertical
look for effect over cost when on health and wellness, we can consolidation of practices and
considering treatment options. leverage system and self- systems is driving costs but at
This trend is reversing by placing reported data to create better the same time new channels
more knowledge and power to treatment journeys. such as vertically aligned
the patient. The power is in the hand-held retailers are coming in seeking to
technology. embrace the two other trends.
17 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyDispensers
Dispensers
Retail Specialty Home Care Hospitals
Retail is going Specialty began with With explosive Our hope for the full view
through a migration from independents, went to growth of medical benefit of the patient journey (not
90% generics to a world payers, and depending on products, the opportunity just the prescription
of ecommerce, the drug class is now in a for home care is journey)
customized pharmacy fight between payers and significant.
services and integrated hospitals. With beautiful data
Primary Care. The primary challenge is coming online innovative
Focus in the 2020s will be the change in focus from contracting becomes a
the digitization of the blood products to other reality.
patient journey therapies.
19 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanySP landscape as of 4/2022
Independent / PE
Returning to independent
Payer Aligned
PBM Aligned
Retail Aligned
Distributor Aligned
Office / Clinic
Standalone
IDN
Network
Manufacturer
*Note – For Illustrative Purposes Only, Not an Exhaustive List
20 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyAdministrators
Medical Benefit Administration is going through a change
Primarily IDNs; many
Hospital Out
have their own home
Patient/HOPD
infusion department
Various; primary site of
In-Office
care
In office
infusion Outsourced managed
management infusion services
programs
Alternate to a primary
Alternate Sites site of care supporting
of Care/ASOC various therapeutic
areas
Stand alone national
Home Infusion provider of home
infusion therapy
Supports infused
Specialty
products through AOB
Pharmacy
but does NOT have
(AOB)
infusion resources
*Note – For Illustrative Purposes Only, Not an Exhaustive List
22 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyIt is the manufacturers job to understand reimbursement – ensure $ works
Commercial Medicare Medicaid
Physician • ASP + % • WAC + 6% (first 6 months)
Office/Clinic • AWP - % • ASP + 6% (updated quarterly, under Budget Control Act Sequestration: +3.8% Q1- • AWP - %
• Negotiated Rate • ASP + %
Buy-n-Bill Q3 2013, +4.3% Q4 2014+)
Specialty
Pharmacy • AWP - % • AWP - %
N/A
• WAC + % • WAC + %
Provider
Retail • AWP - % plus DF
• AWP - % plus DF N/A
• WAC + % plus DF
Hospital • DRG • DRG
• Drug cost could be • DRG • Drug cost could be
Inpatient carved out
• Drug cost could be carved out carved out
• ASP + 6% if drug is not assigned APC: updated quarterly, under Budget Control Act
Hospital • AWP - % Sequestration: +3.8% Q1-Q3 2013, +4.3% Q4 2014+)
• ASP + % • ASP + 5% if drug is assigned APC • Varies by state
Outpatient • WAC + %
• ASP + 4% if drug is SCOD
ASP = Average Selling Price APC = Ambulatory Patient Classification DRG = Diagnosis-related Group
AWP = Average Wholesale Price DF = Dispensing Fee SCOD = Separately Covered Outpatient Drug
23 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyDistributors
Distribution is changing with change in the Product Archetypes
Precision, Gene
Specialty “Tweener” Specialty Specialty Orphan and Rare and Cell Therapy
Brand Generic Vaccines Generic Specialty Biosimilar PBM Biosimilar MCO Disease (ORD) (GCT)
Direct Direct Direct Direct Direct
Indirect Open Indirect LD Indirect Direct
Indirect LD Indirect Indirect Indirect LD Indirect
Payer
Wholesale Distribution Highly varied Specialty Distribution
Influenced
Traditional distributors have shown apprehension when moving to the right of the archetype board. Payer channels are
stepping in to control egregious mark-ups on the most innovative therapies and orphan and rare. Medical Benefit products
generally can’t have discounts making them less attractive to distributors. All these effects change a manufacturers view of
the broader topic. Traditional distributors are working to educate their teams on the variations of the therapies but it is a
struggle point.
25 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyDistribution Channel remains suppressed since 2016 Patent Cliff Distributors still have not recovered from the rabbit punches to their stomachs from the late 2016 patent cliff but remain stable businesses. Unfortunately, there is more risk than upside to their model as the newer products don’t require their services, independents remain at the most risk to ecommerce, and price decreases with reform or simply the lack of price increases. 26 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
We can see the flavors of distribution stepping back on the players Parent Company AmerisourceBergen McKesson Cardinal Health Other Retail Pharmacy, SP, IDN SP Hospital, Alternate Sites of Care VA N/A N/A N/A DoD N/A N/A Clinic Physician Office N/A 27 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
Vertical Integration –
Optum Frontier, Cigna’s Evernorth, CVS Examples
These models aim to control CGT and ORD setting
the stage for “direct to payer”
Building on Express Script’s win of Spinraza as an
exclusive, the goal is to gain this ED access for more
products and be payer-neutral.
28 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyPulling it all together
To set the right product strategy – focus on three waves
01 02 03
Therapeutic Area and Product Administrator and
Drug Class Archetype Benefit Design
Therapeutic areas and drug classes Archetypes are used to better understand Self or HCP administered. And this typically
matter as they present a varied set of impacts of the patient base, annual and drives the benefit structure. These follow two
product, patient, provider, payer and per dispense/admin cost, payer or access completely set of powerbases and approaches to
site of care situations and options. hurdles, and the therapy’s logistics providers, patients, patients and pharmacies.
Product Product strategies are becoming like snowflakes in their
drug classes with high degrees of variability for channel,
strategies market access and the services that wrap around it all
30 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyMost Common Mistakes of Commercializing Pharmaceutical Products
01 Copy and Paste from one product to another –
even when it is not in the same drug class
02 Lack of alignment or misalignment to the 5
function areas – marketing, market access, field
sales, trade and distribution and patient support
03 Not appreciating the details or nuances for how
decisions are made across payers, providers,
pharmacies or patients – this is exponentially so
when applying the incorrect philosophies and
processes to benefit types
31 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyWhere do we start to unpack a vision for our industry to 2030?
1. Product Archetypes
Innovation is driving dramatically different
products, treatments, pricing and
corresponding access challenges
4. Channels/Chessboard
The hardest part of keeping it all 2. HC/Rx costs and Reform
straight is that we have a tendency The pressure being applied to
to listen to our customers that have industry is coming from the Plan
a siloed, subjective and self-serving Sponsor with budgets hemorrhaging
view of the future and patients facing greater concern
about rising OOP impacts
3. Technology and Services
The use of technology from disease awareness to
prescribing to patient choice to education and support
will be enabling the evolution of the patient treatment
journey and ultimately outcomes
32 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company33
Thank you
William Roth John Cervione
General Manager & Managing Partner Managing Partner
wroth@consultbfg.com jcervione@consultbfg.com
678.522.3728 860.558.5788
33 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain CompanyFollow us for latest industry news consultbfg.com 34 | Proprietary and Confidential BLUE FIN GROUP, an IntegriChain Company
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