Should Competitors of Negotiated Drugs Review Their Evidence Strategy?

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Manufacturers of therapeutic alternatives to negotiation-eligible drugs should examine their value and evidence strategy in response to new dynamics.

The Inflation Reduction Act (IRA) is bringing landmark policy changes to the healthcare industry, raising important questions about pipeline investmentdrug price negotiation, and reimbursement. In the IRA Question of the Week series, Avalere answers the pressing questions shaping healthcare stakeholders’ strategic decision-making as the law is implemented.

In the first part of this two-part installment, Avalere experts discuss key value and evidence considerations for manufacturers of products that are competitors to drugs eligible for Medicare price negotiation. The second installment will focus on considerations for competitor manufacturers related to pipeline strategy, commercialization, and contracting.

The IRA directs the Secretary of Health and Human Services to select drugs for price negotiation from the top 50 eligible drugs by Medicare spending and establish a maximum fair price (MFP) to reduce Medicare’s drug spending. Current program guidance describes the agency’s approach to drug selection and initial MFP offer development, which includes the evaluation of evidence about alternative treatments. The Centers for Medicare and Medicaid Services (CMS) stated it will select therapeutic alternatives at the indication level but is not disclosing in advance which products it will use.

Given the short, month-long window between the negotiation drug list release (September 1, 2023) and the evidence submission deadline (October 1, 2023), manufacturers of products that CMS may consider therapeutic alternatives should mitigate risk and leverage opportunities by considering their potential business impact and shaping engagement strategies with CMS and other coverage and utilization decision-makers early. Figure 1 outlines the decision tree for determining value and evidence strategy for competitor manufacturers of IRA negotiation-eligible drugs.

Figure 1. Value and Evidence Decision Tree for Comparators to Negotiation-Eligible Drugs
Figure 1. Value and Evidence Decision Tree for Comparators to Negotiation-Eligible Drugs

Is the Product a Therapeutic Alternative?

The first question to consider is if any products in a manufacturer’s portfolio may be considered therapeutic alternatives to a negotiation-eligible drug by CMS. A wide range of products fall under this definition, including established standards of care, prior lines of therapy, in-class competitors, and pipeline assets. CMS will make this determination at the indication level but may consider off-label use, including those uses listed in national guidelines and approved Part D compendia, as well as based on data submitted by manufacturers and the public. Even if a drug itself is not eligible for negotiation, evidence about it as a therapeutic alternative that is submitted during the negotiation may be considered by CMS, and CMS’s evaluation of that evidence may be published as justification for its MFP offers to competitors.

Do You Face Risk from the Drug Price Negotiations of Competitors?

Manufacturers need to assess their entire portfolio for the risk of competitors being negotiated. Risk may be limited to one product or may be broader across multiple assets and therapeutic areas. As part of this assessment, it is important to understand how a negotiated product’s MFP may influence a product’s utilization. Manufacturers should also consider the risk of CMS publishing evidence disadvantageous to therapeutic alternatives.

Should You Engage with CMS?

If manufacturers determine they face risk from being a therapeutic alternative to negotiated drugs, it is important to determine if and how they should engage with CMS to mitigate risk. This includes considering if the overall return or potential benefit is worth the investment in engagement. Manufacturers should consider whether they have relevant and impactful evidence to submit as part of the Negotiation Drug Elements Information Collection Request. Additionally, manufacturers should explore the value and potential impact of engagement strategies outside the formal evidence submission process.

Should You Engage with Other Coverage & Utilization Decision-Makers?

In parallel, manufacturers should determine if and how they can mitigate risk by engaging with other stakeholders driving coverage and utilization decisions, such as Part D plans, commercial plans, or providers. The value of such engagement will be measured by a manufacturer’s ability to mitigate access threats and leverage opportunities resulting from the competitor’s published MFP and associated justification.

What Evidence Should You Share and How Should You Present It?

The type of evidence CMS requires and how it is shared may vary significantly from requirements and processes used by other payers and value assessment bodies. CMS will weigh evidence differently based on the population, outcomes, and methodology. Potential evidence may range from individual drug performance to therapeutic-level data, and details will depend on a manufacturer’s competitive position. In addition to selecting the most meaningful evidence for submission, manufacturers must also think about how to present and message their evidence in a way that will resonate with CMS and optimize outcomes.

Manufacturers should also determine whether competitive dynamics will drive additional rebates beyond MFP among plans and other stakeholders and, if so, what evidence is needed to support those negotiations. Manufacturers can identify evidence demonstrating unique aspects of their value proposition, such as evidence that demonstrates potential patient harm of reduced access or evidence countering conclusions made by CMS. Like CMS evidence strategies, the selected evidence should be meaningful to the stakeholders and presented in a way that resonates with its intended audience.

Broader Considerations for Future Therapeutic Alternatives

Beyond the near-term strategies necessary to prepare for upcoming IRA negotiation cycles, manufacturers should also weigh the risks of future investments in certain indications, product types, and therapeutic areas. The Medicare drug price negotiation program is evolving, and manufacturer value and evidence strategies to mitigate risk will need to evolve in response, both for negotiated products and their potential therapeutic alternatives.

Avalere experts in drug pricing, Medicare, evidence strategy and generation, and plan design can help you understand what IRA provisions mean for your organization and weigh in on key implementation decisions. To better prepare for and shape the changing healthcare landscape in 2023 and beyond, connect with us.

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