Payor Insights for Manufacturers

BY: Staff

Payor formulary placement and reimbursement amounts are the two most important aspects of a manufacturer’s success in the marketplace – they create pharmacy demand which in turn leads wholesale customer demand and pricing.

So your product receives FDA approval – what needs to happen before your first sale?

Payor Coverage Decision

The very first step in having a product covered is to file the NDC with the FDA. Next, it is important for manufacturers to add the product to product compendias (MediSpan, Red Book, First DataBank, Gold Standard etc.) because that is how payors find out about new products. Under Federal law, payors have 90 to 180 days from the marketing approval date (PDUFA date) to decide on covering a product.

It is extremely important for small manufacturers to reach out payors to ensure proper coverage. The most benefit will come from targeting specific individuals at the biggest payors – of the roughly 342 million managed care lives, about 274 million (80%) are managed by one of top 10 payors.

  1. Pharmacy directors ; always a pharmacist as a lead over the entire program ;
  2. Actuary – value assessment committee (financial) – talk about disease overall 
    *PLEASE BRING BIM model – *
    must have value proposition – do a study with me…

During the discussion, there should be three focus points:

  1. PROBLEM: Presenting the epidemiology involving the product sets up the conversation. The discussion should be non-branded information where the disease area and mortality is covered.
  2. SOLUTION: The product is introduced and clinical trial information is presented.
  3. COST: Payors are most interested in the Return on Investment – it is crucial to provide a Budget Impact Model (BIM) on how there will be cost-savings over other products in the same therapy class; specifically, how it will reduce the Per Member Per Month cost.

High Cost/Reimbursement Drugs

The size of the largest payors makes it difficult for them to audit all products that make it on their formularies. This creates an opportunity for rogue companies to introduce excessively expensive products with equally high reimbursement. PBMs focus on “Per Patient Per Month” costs, which averages cost across patient populations. Therefore, if the therapeutic class doesn’t have diabetes-type volume, it may take PBMs roughly 12 to 18 months for the PBM’s to “catch up” to these problem products – possibly even longer.

Parallel Review for Devices with CMS

In 2011, FDA and CMS introduced the Parallel Review Pilot Program (Parallel Review), which established a mechanism for FDA and CMS to simultaneously review the submitted clinical data to help decrease the time between FDA’s approval and the subsequent CMS national coverage determination (NCD).  In October 2016, the FDA and CMS announced the Parallel Review program will be fully implemented and extended indefinitely.

Parallel Review has two stages:

  1. FDA and CMS meet with the manufacturer to provide feedback on the proposed pivotal clinical trial within the CDRH Pre-Submission Program.
  2. FDA and CMS concurrently review (“in parallel”) the clinical trial results submitted in the PMA or De Novo request.