Medicare Part D, Part III: Impact of Policy Changes on Market Access

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Tune into the third episode of the Avalere Health Essential Voice miniseries focused on Medicare Part D. In this segment, our experts discuss policy changes currently under consideration and how stakeholders can prepare for the potential market access impacts.
“If I'm putting myself in the shoes of a manufacturer, I'm trying to get to those secondary effects that I think have the most bearing on one's strategic review and market research plans. If you look at a legislative text, you're not going to be able to glean immediately what the market responses are going to be. That’s the most important piece that's going to drive strategy.” Ryan Urgo


Ryan Urgo , Managing Director, Policy

Ryan Urgo provides strategic advice to drug manufacturers, health plans, and advocacy groups to help them navigate the health policy environment and understand the impact of legislative and regulatory policies on their business goals.

Guest Speaker
Neil Lund , Senior Advisor, Avalere Health
Neil Lund brings more than 30 years’ worth of actuarial and formulary management experience to the firm; he works with a range of life sciences and health plan clients on issues tied to market access, patient access, and product positioning.

This interview was originally published as a podcast. The audio is no longer available, but you can read the transcript below. For updates on our newly released content, visit our Insight Subscription page.

If you would like to watch the video version, please visit our video page.


Ryan Urgo

Hi. And welcome to another episode of Avalere Health Essential Voice. I’m Ryan Urgo, Managing Director in the Policy Practice here at Avalere, and I’m joined today by Neil Lund, Senior Advisor in our Market Access Practice and former retired Chief Actuary for CVS Health.

Our podcast show covers a wide range of healthcare topics. Today’s episode will be another installment in our Part D miniseries focused on policy changes and the impact on market access. So I’ll kick us off, Neil.

The legislative environment right now is, there’s quite a bit of activity underway. We know that the House bill has been out now for several weeks. There’s still negotiation going on in the Senate, but from a Part D perspective, we know that there is a lot of activity under consideration.

We’ve got Medicare negotiation, the details of which, I think, are probably still being hammered out between the House and the Senate—they may not align on the exact policy, but we know that they both share the goal of Medicare negotiation in Part D—inflation penalties, which seek to curb list price growth in the Part D program, and of course, Part D redesign, which would completely change the incentive structure in the program and put it on more stable footing for the future.

So there’s lots going on on the legislative front. What is uncertain to us is the pace of when this will all play out. It’s fair to say at this point that the Senate is going to need more time than they had originally signaled to put something out that is agreeable to the majority of their caucus.

They can’t really afford to lose anybody. So the politics are tricky and there’s quite a bit of uncertainty in the market. But one thing that is certain is that with the right planning on the front end, stakeholders such as life sciences companies and health plans can be prepared for any scenario that plays out.

Neil, just starting us off with a question. How do you think it’s best to go about understanding how these various policies affect a market access and reimbursement strategy?

Neil Lund

Well, first of all, Ryan, all of the constituencies need to stay up to date and really watch Congress. With very even divides in both the House and the Senate, things could change dramatically overnight.

Things could happen overnight, and it’s always going to be a very dynamic situation with the Congress we have. But specifically to the point, this is a place where using existing data, you want to model various impacts, have contingency plans around that, and be definitely aware of the impact of anything on all of the constituencies that come into play. Not just yourself if you’re a manufacturer, but understanding plans and members, for example.

Ryan Urgo

Yeah. If you think about the different outputs that any good quantitative modeling would assess, one is the manufacturer’s overall gross to net, which is the sum total of all of the various reductions on the list price and how that ultimately is going to affect the bottom line.

Another is net plan liability and changes to net plan liability. Of course, that has a direct impact on the potential direction of the premium. Of course, member impact and out-of-pocket costs is another output that has to be taken into consideration in this process.

And also total federal spending, which is the sum total of all of the various changes to a particular policy and how it scores. How do you think Neil, that you can do modeling in a way that estimates out all of these various outputs in the right way? Maybe take Part D benefit redesign as an example?

Neil Lund

Sure. And this is something that’s fairly routine for health plans to be doing as part of this, so it’s important that manufacturers be in a position to follow suit, but the health plans will look very importantly at the impact on the member, because Part D is purchased annually by the members, and it’s a sophisticated market out there that makes these decisions, so the member impact is critical.

You have to look at what will happen with the manufacturers and how the plans or the PBMs are going to be negotiating with the manufacturers for rebates, tier placement, UM, and other considerations around that, because that is a piece that could change relatively dramatically depending on what happens with any of these, not just redesign, but also say price negotiation by the government.

There are some other pieces that come into play though too. Not only just the government, government spending and key, but how is the pie of funding carved up between the government, the member and manufacturers, because those are the real key pieces that fund this program today.

And finally, you can’t forget the pharmacies: the network development, the delivery of this thing, there’s an impact to there. It’s often subtle, but pharmacists are well-regarded advisors to the members, so you cannot ignore the impact on the pharmacy.

Ryan Urgo

I mean, these are great points. To me, I think the sum total, the effect of all of this work is to be better prepared. And if I’m putting myself in the shoes of a manufacturer, it’s really trying to get to those secondary effects that I think have the most bearing on one’s strategic review and market research plans.

Now, if you look at a legislative text, you’re not going to be able to glean immediately what the market responses are going to be, right? That I think is the most important piece that’s going to drive strategy, is how will health plans respond to a particular policy? How will manufacturers then respond in kind?

Neil Lund

And the health plans will respond based on the perceived economics to the member. And how will the member and prescribers respond to these changes?

Ryan Urgo

Right. So ultimately, having a good quantitative foundation for how these policies play out financially then gives you an important roadmap for being able to predict what the market responses will likely be, and-

Neil Lund

Predict or have alternative responses depending on what happens.

Ryan Urgo


Neil Lund

So preparation is the key.

Ryan Urgo

Right. And at the end of the day, that’s what can prepare any stakeholder for any scenario that happens legislatively. If you’re a market access professional, you may not be able to influence the specific trajectory of the bill, but what you can do is prepare for many different outcomes with the right modeling on the front end. Wouldn’t you agree?

Neil Lund

I fully agree.

Ryan Urgo

Great. Well, Neil, I just want to thank you for joining me today and for taking the time to have a quick chat on this topic. And thanks to all of you for tuning in to Avalere Health Essential Voice. Please stay tuned for more episodes in this miniseries.

And if you’d like to learn more, please visit us at Thanks.

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