ALSCG webinar addresses impact of new health insurance marketplace for pharma
By Mia Burns
Although healthcare insurance marketplaces and exchanges as mandated via the Affordable Care Act will introduce areas for growth, Alliance Life Sciences Consulting Group executives say that potential risks will need to be addressed in the coming months. The company hosted a webinar focusing on the new and evolving areas. The objective of the webinar is to provide participants with a fuller understanding of how the influx of new benefits, rules, processes and newly insured Medicaid and commercial health plan members will affect pharmaceutical manufacturers.
“Starting Oct. 1, 2013, and running through March 2014, the new health insurance marketplace opens for customers,” says Joel Owerbach, Pharm.D, and VP of health policy and strategy, ALSCG. “This is the first opportunity for individuals who qualify to sign up for the new insurance programs on the exchanges with coverage beginning on Jan 1, 2014.”
Dr. Owerbach also told Med Ad News Daily, “The eventual pool of enrollees by 2021 is estimated to be up toward 30 million. There are over 50 million uninsured in the USA currently. For the first open enrollment for 2014 coverage, estimates vary, but the latest CBO estimate from July 2013 is that seven million will sign up through the exchanges and another nine million will gain access to Medicaid in 2014. The individual mandate requires health insurance coverage starting in 2014 – or face a penalty.”
Open enrollment from a plan or carrier perspective is when plans try to retain current members and gain new membership for the next year; typically by shifting employer coverage from another carrier. “As over 70 percent of enrollees through the new exchanges will be new to insurance, this represents a new market and pool of members – without having to win over a new employer,” Dr. Owerbach says. “With as few of 1 to 2 to as many as 17 companies offering plans on the exchanges in each state in early evaluation; there is a large pool of potential enrollees for each plan. This is what I’m referring to as the largest open enrollment opportunity in history. There are no ‘records’ for this type of national enrollment potential that I’m aware of, but the last time this opportunity came up at a national level was in 2005 with the initial marketing of Medicare Part D Plans for the 2006 coverage year.”
ALSCG says that these changes will present a new learning curve for the pharma industry. “As we expect continual evolution, growth and change within the new marketplace, often down to individual state level, (i.e. enrollment changes, participating plans, new regulatory requirements/expectations and cost pressures through-out the chain, to mention a few) we would recommend that pharma arm themselves with the right tools, services, and knowledgeable experts to help guide them through all aspects of the business and stakeholder engagement process,” Dr. Owerbach told Med Ad News Daily.
In addition, insurers and benefit managers are also facing a learning curve within the new marketplace, Dr. Owerbach says. “They will be quite busy dealing with current and new customers and helping them through the process as well with significant new operational and reporting requirements. From an historical perspective, I would expect the benefit managers and insurers to engage with pharma in the usual and customary way; requesting new, more aggressive pricing and rebates as well as more robust outcome and clinical evidence support of their products. Part of the learning curve for pharma is to: understand the dynamics, timeline, and geography over which this is likely to unfold relative to the overall marketplace requirements and regulations - short term and long term; optimize access to their products within the new benefits for the marketplace; and assure they are providing the tools and ongoing education/information to the sales and account management teams to best engage with plans and insurers in what hopefully will be a collaborative and win-win process.”
As presented in the webinar, pharma manufacturers will need to adapt to the new health insurance marketplace, with sales forces and account managers retraining and changing focus in relationships with new and existing entities. “To effectively deal with and succeed through all of the market reforms taking place (payment/financing reform, care delivery reform and health insurance reform –i.e. the marketplace), pharma will need to adapt through many if not most of its internal and external facing operations; from early product development/research to their plan account management functions,” Dr. Owerbach told Med Ad News Daily. “Both the brand managers as well as the plan/carrier account managers would be on my priority list of pharma teams that need to be engaged now in the adaptation process.”
ALSCG executives say that pharma will need to emphasize on value demonstration and may move away from traditional contracting to value-based contracts. “Traditional pharmaceutical contracts focus on market access and, more recently--price stabilization (capping product price increases),” Dr. Owerbach says. “While value-based or outcomes-based contracting is still quite rare in the United States and fraught with regulatory and data challenges, there is growing interest from the plan/benefit manager side to explore these. Value-based contracting, at a high level, would hold the pharma company at some risk for the clinical performance of its product, with additional pricing or reimbursement concessions if patient outcomes or drug performance did not meet the agreed upon standards, metrics or results. ”
Current patient access schemes will need revisiting. “There are three major points of potential impact of the new marketplace on current drug ‘coupons’, subsidies, copay assistance or indigent program support,” Dr. Owerbach says. “Are they allowed with the new marketplace benefits and enrollees? Are they considered a federal healthcare program? There has yet to be any official clarification or ruling on this question. The legal teams within each pharma company will likely need to facilitate a foundational assessment and justification for this to continue to apply to the new marketplace plans and members. With millions of previously uninsured patients getting insurance, this may reduce the numbers of members getting product through a company’s indigent program and support a shift in resources. ACA and the new marketplace drug benefit requirements have a few specific impacts: Many of the new benefits in the exchanges will have a deductible that may apply to both drug and medical expenses. This may increase the initial out of pocket cost for members and, considering the majority are lower income, could present another barrier to access particularly to brand drugs. Most medical-pharmacy commercial benefits and all of the new marketplace plans will include a maximum out of pocket expense for individuals and families (without a subsidy; $6,350 for individuals and $12,700 for family in 2014). This will include all of medical and pharmacy expenses. This may impact or, in the least, help frame the discussion around subsidies for expensive specialty drugs.”
The impact of generics and biosimilars will need assessment, and in a sense, this could refer to the consequences of too many “me-too” drugs, Dr. Owerbach told Med Ad News Daily. “The formulary requirements within the new marketplace requires at least one drug be covered in each class or the minimum number of drugs in the state specific benchmark plan formulary,” he says. “With the wave of new generics now, and the potential for significant biosimilar products coming in the next three to five years, even if they are not and likely will not be marketed as a biosimilar, careful planning, strategy, and creativity for brand and plan account managers will be required to optimize product positioning.”
Posted: September 2013