Bay Bio: Preparing for Coverage & Reimbursement: Demonstrating Value

Bay Bio hosted a panel discussion this morning on biotech reimbursement changes and trends in light of healthcare reform. I have summarized my takeaways from the presentation below:

1. The higher the better. Payers have been adding a lot of the new drugs to the 3rd or 4th tier of benefit plans, which with the new pay differentials, puts them out of reach of many patients. Getting your drug into a preferred brand tier is more important than ever.

2. Follow the dollars. As the focus shifts from price to volume, it's important to understand how your partners make money to avoid cutting them out of the picture. Sales reps will need to be able to talk money (list price, product costs and pricing of competing drugs) in addition to clinical benefits.

3. Partner with the payers. One of the panelists talked about how his company avoided making a costly investment in comprehensive support services by talking with the payers about their value proposition. So before investing in support services think about who can deliver the product most efficiently and whether the services needed already exist.

4. Fight to stay in the game. Comparative studies could limit the number of drugs in a class. Manufacturers are stepping up services to ensure patients fill scripts and they get the data to demonstrate outcomes. Many are providing benefit investigation services and bridging insurance gaps for those newly insured.

5. Expect oncology costs to be reined in. Due to the nature of the cancer, oncology drugs are one of the last frontiers for insurers to tackle. United Healthcare is reportedly leading the charge by adopting the NCCA guidelines for appropriate treatments. Other payers are curbing cost by limiting physician buy and bill programs and using other channels of distribution such as specialty pharmacies.

6. Think about your value proposition. If there is already a therapy or other treatment on the market, think about how your drug could lower the total cost of care. If there is another drug on the market, think about the clinical differentiation of the two (i.e. Ambien). Insurers pay for value, not convenience.

7. Watch what you're giving away. Many of the distributors charge small companies as much as 12% just to put their product on the shelf. If you can improve your margins by even a few percent, you can add a lot to your bottom line. Do what you can to squeeze as much as you can out of the top line.

8. Go for the gold. Change brings opportunity. Reform will make someone rich. If it's not you, who do you think it will be?