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Identifying and Navigating

Market Access Hurdles in

Licensing and Sales /

Acquisitions for Early Stage

Assets

January 14, 2019

Webinar

Identifying and Navigating Market Access Hurdles in Early Stage Life Science Assets

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January 14, 2019

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Objectives 3

Identifying Market Access Hurdles 6

US Market Access Landscape Trends 12

Key Factors in Gross to Net Estimates 20

Conclusions 25

Questions 27

Market Access Partner Due Diligence 28

2

Agenda

Paul Gallagher, MBA• Founder and President of

Compass Strategic Consulting• +1.203.777.9570 (O)• [email protected]

Barbara Pannone, PhD• Vice President,

Consulting Strategy & Operations

Maximilian Vargas, PhD, MBA• Vice President, Consulting

Strategy & Account Management

mailto:[email protected]


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Objectives

3


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Objectives

Describe when and how to characterize the market access landscape and assess price and access in the partnering

process

Identify a process to develop initial market access evidence to support partnering and commercialization

Objectives

4


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Navigation of global and local hurdles to get your asset / innovation to patients in need at an

optimum price to your customers

What is market access?

5

Patients /

caregivers

Providers

Payers /

budget

holders

Shareholders

/ investors

Partners

Employees

VALUE


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Identifying Market Access Hurdles

6


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While the need for and comprehensiveness of market access strategies and tactics increase as

products approach launch, the foundation should be forged in Phase I / II

Market access landscape

7

Phase I / II Phase III Registration

Health

Technology

Assessments

Formularies

Global

Access

National

Access

Regional

Access

Patient &

Customer

Access

Patient /

Clinician

Value

Identification

Value

Creation


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Value identification Value creation Value communication

Identifying and navigating market access hurdles begins with clinical and market access

landscapes and refinement of TPPs

Engineering successful market access

8

Phase I / II Phase IIINDA / EMA

Submission

NDA / EMA

Approval

Landscape and TPP

Refinement

Current / future landscape

• Unmet needs

• Clinical

• Competitive

• Reimbursement /

funding

TPP and scenarios

• Value drivers

• Evaluation

• Price / access testing

Evidence Development

Value message

developmentTarget product profiles to

meet registration and

HTAs*

Strategic value

propositions

Launch Execution

Providing evidence

Addressing unmet

needs

Creating awareness

Gaining and

supporting access

Treatment

guidelines and

coding initiatives

Market Shaping

Economic models

Advisory boards

PublicationsPrice testing

Clinical development plan*health

technology

assessment


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The identification of hurdles begins with investigating the coverage, coding, and payment of

current or analogous treatments…often a component of the RfP process

Coverage

Specific products and services that are eligible for benefits and the requirements, both medical and

economic, for receiving those benefits

Reimbursement hurdles

9

Coding

Classification of patient conditions, services, and products that

are used to process claims

Payment

Process, sources, and amount

of payment to providers


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The patient populations and delivery of diagnosis and treatment are key in identifying the

payment, coding and coverage hurdles

Gene therapy for treatment of

a rare genetic disease

diagnosed at birth

Physician administered in an

outpatient infusion center

Case study

10

Case 1 Case 2 Case 3

Drug/device combo for the

treatment of a common

cancer that primarily affects

older adults

Inpatient administration

Specialty drug, for a chronic,

non-rare disease in a broad

adult population

Self-administered oral


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While coverage or access is usually the most important regardless of the type of asset, coding and

payment issues must be also be assessed since they affect revenue

Case study – reimbursement hurdles

11

Payment

Coding

Coverage

Case 1 Case 2 Case 3Reimbursement hurdles

Importance to case examples

• Physician administered

• Patient administered

• Procedure

• Care setting

• Method of administration

• Distribution channel

• Payer mix

• Restrictions

• Benefit

Importance:

Low

Medium

High

Gene therapy, physician

administered, pediatric

Drug/device combo, oncology,

inpatient, senior

Specialty oral,

commercial, adult


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US Market Access Landscape Trends

12


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An increasing share of commercial members are in plans with closed formularies which can

exclude products when there are options and NDC block new products until formulary review

More restrictive commercial benefit designs

13

0%10%20%30%40%50%60%70%80%90%

100%

2015 2016 2017 2018

Open

Open withexclusions

Closed

Sh

are

of

co

mm

erc

ial li

ve

sTrend in commercial benefit designs

n = 35 n = 30Panel: n = 33 n = 31

Panels represent > 150 million covered lives

New products are more likely to be NDC blocked until formulary review potentially increasing costs of co-pay support

programs

Sources:

Compass primary research


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Since 2011, the share of commercially insured beneficiaries with a drug benefit design with four or

more tiers has increased from 14% to 51%, increasing cost share

14

More restrictive commercial benefit designs

0%

10%

20%

30%

40%

50%

60%

70%

2011 2013 2015 2017 2018

Sh

are

of

co

ve

red

wo

rke

rs

Year

Four or More Tiers

Three Tiers

Two Tiers

Payment is the same regardless of type ofdrug

No cost sharing after deductible is met

Other

Distribution of prescription drug tier benefit design for commercially insured workers, 2011 – 2018

Sources:

https://www.kff.org/report-section/2018-employer-health-benefits-survey-section-9-prescription-drug-benefits/

http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2018

As more commercial plans move to include specialty tiers in their benefit designs, cost share for patients and co-pay support

programs increases


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Leading PBMs continue to increase the number of drugs excluded each year—some are excluded

solely due to price increases deemed excessive

Increase in number of excluded drugs

15

CVS excludes products with alternatives simply because of price increases• “On a quarterly basis, products with egregious cost inflation that have readily-available, clinically-appropriate and more cost-

effective alternatives may be evaluated and potentially removed from the formulary.”

6294

124 120

196

203

59 66 81 87

156

238

0

50

100

150

200

250

2014 2015 2016 2017 2018 2019

CVS Express Scripts

Nu

mb

er

of

dru

gs e

xclu

ded

Year

Trend in number of excluded drugs by CVS and ESI

An increase in exclusions may drive more aggressive contracting for access in competitive categories

*Sources:

CVS: https://www.caremark.com/portal/asset/Formulary_Exclusion_Drug_List.pdf

ESI: https://www.express-scripts.com/art/pdf/Preferred_Drug_List_Exclusions2018.pdf


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While manufacturers captured most of the price increases before 2012, recent results show an

average net increase under 2% in 2017

16

WAC and net price increases dropping

*Sources:

https://www.iqvia.com/institute/reports/medicine-use-and-spending-in-the-us-review-of-2017-outlook-to-2022

Protected brand invoice and net average price increases, 2011 to 2017

8.80% 9.10%

4.70% 4.30%

2.40%3.20%

1.90%

9.30%10%

11.30%

13.50%

11.90%

9.00%

6.90%

0%

5%

10%

15%

2011 2012 2013 2014 2015 2016 2017Ave

rag

e p

ric

e in

cre

as

es

Year

Estimated Net Price Growth (%) Brands Invoice Price Growth (%)

• For contracted products, price predictability and more aggressive rebates seem to be reducing the net

• For non-contracted products price increases of 5% seem doable


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Traditional

program

Copay

accumulator

Copay

maximizer

Manufacturer contributions may no longer count toward deductibles or out-of-pocket maximums

under the co-pay accumulator program increasing the sponsor’s cost substantially

Traditional program: co-pay coupon amount is applied to patient’s deductible and the manufacturer contributes only until the patient’s out-of-pocket maximum (OOP) is reached

Co-pay accumulator program: the co-pay coupon amount does not count towards the patient’s deductible and a manufacturer contributes until the co-pay coupon maximum is reached

Co-pay maximizer program: the co-pay coupon amount does not count towards the patient’s deductible and the maximum value of the manufacturer’s payments is applied evenly throughout the year

Co-pay accumulator program

17

$3,000

Max

Monthly

$10,000

Annual

$30,000

$2,960

Patient OOP

(30% coinsurance)

Co-pay Program

Patient

30-day supply of a chronic specialty drug: $10,000, patient with a OOP maximum of $6,000

$6,000

$30,000

in 10

months

$30,000

in 12

months

$40

Sponsor

Sponsor Cost

AnnualMonthly


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Co-pay accumulator programs are becoming more common with most focusing on specialty

products. Plans with co-pay accumulators expect it to grow in share of lives and more products

beyond specialty

Most accumulator programs apply to only products available through specialty pharmacy since those claims are more trackable

Payers expect the share of lives subject to copay accumulator programs to grow over the next few years as well as expand the reach to other products outside of specialty

Co-pay accumulator program

18

Source:

https://www.drugchannels.net/2018/09/copay-accumulator-update-widespread.html:


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As the share of patients in high deductible health plans increase, so does patient cost burden

since copay accumulator programs require members to hit these higher deductibles out-of-pocket

Increase in members in a high deductible plan

19

Source:

http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2018

High deductible plans have

lower premiums, but have

a maximum out-of-pocket

expense of $6,650 for

singles and $13,300 for

families

The share of members in a

high deductible plan has

risen, a trend payers

expect to continue

More employers are offering a high deductible option

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015 2016 2017 2018

$0 - $499 $500 - $999

$1,000 - $1,999 $2,000 or more

Trend of deductibles for covered workers with single coverage

Dis

trib

uti

on

of

co

ve

red

wo

rke

rs

Year

67%


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Key Factors in Gross to Net Estimates

20


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For early stage assessments, factors of distribution, contracting, and patient affordability should

be assessed since they can have a major impact on the Gross to Net

Gross to Net is based on the need according to US GAAP (Generally Accepted Accounting Principles):To recognize

revenue upon shipment of a product, a manufacturer must be able to reasonably estimate any potential future

adjustments to the price of a product sale that is subject to such adjustments

Gross to Net - the share of transactional costs in the channels that can be charged against the sale of the product -

generally fall into three categories

• Distribution—fees to wholesalers and specialty distributors

• Discounts and rebates—payments to insurers to gain access to commercial and government formularies or for transactions in

care settings such as hospital outpatient clinics or private practices

• Patient affordability payments—offsetting payments to reduce or eliminate patient out-of-pocket expenses through patient

assistance, which is generally a minor factor, and copay support programs, which can be the largest component of the GTN

during launch

Gross to Net

21


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While patient’s out-of-pocket costs have been stable for those who use copay support, the cost to

the manufacturer has increased due to their rising list prices and benefit design changes

Copay support programs

22

Initial cost exposure has

increased consistently,

peaking in the first quarter

• Increase from $79 (2013) to

$121 (2017), a CAGR of

11.2%

• The reset of the deductible

in the new year

Coupon and manufacturer

buy down programs have

increased in parallel

Patient cost sharing has

remained fairly stable at $28

Average Patient Cost Sharing and Manufacturer Buy-Down (Commercial, Brands) per

Prescription in which a Copay Card is Used (US$)


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Redemption rate of copay coupons has increased consistently from 2013 to 2017 with out-of-

pocket expense being reduced for 42% of specialty prescriptions covered by commercial plans

Copay support programs

23

The average cost-reduction

was $261 in specialty and

$76 in traditional brands

The amount of cost share

influences the redemption

rate which is 2.5 times

greater for specialty than

traditional brands

The redemption rate has

increased at a CAGR of

9.7% for specialty and 11.5%

for traditional brands from

2013 to 2017

Coupon Redemption Rate in Commercial Plans for Branded Products by Product Type


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Contracting and patient affordability programs are usually the major contributions to Gross to Net

in the initial years

Case study - GTN

24

Distribution

Contracting

Patient affordability

GTN factors

Importance to case examples

• Rebates for access and to avoid

restrictions

• Mandated government rebates

• Wholesaler terms

• Specialty pharmacy fees

• Co-pay reduction programs

• Denial conversion options

• Patient assistance programs

Importance:

Low

Medium

High

Case 1 Case 2 Case 3

Gene therapy, physician

administered, pediatric

Drug/device combo, oncology,

inpatient, Medicare

Specialty oral,

commercial


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The objectives of identifying price and access hurdles in early stage assets are to produce relevant

evidence of value among stakeholders and provide early estimates of not only price, but cost of

programs to deliver access

Build an evidence-based target product profile that not only describes the asset, MOA and indication but also

• Defines populations and sub-groups that benefit

• Maps the diagnosis and treatment of the innovation

Focus on value, not price, and conduct / commission secondary and primary research to identify the perspectives of

value of the key stakeholders

Identify hurdles in payment, coding and coverage in each channel and country

Execute or seek data from a partner of both clinical and market access landscapes as well as testing of TPPs and

scenarios to identify initial value propositions

Gain a perspective of the market access landscape the asset will encounter when launched

Estimate major transaction costs that can decrease your gross sales

Conclusions

26


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Market Access Partner

Due Diligence

28


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In selecting a partner to conduct initial market access assessments, look not only at the company

but seek an experienced team supporting your needs

Experience in the therapeutic area of concern

Expertise in US and global reimbursement systems

Network of payer decision makers and influencers that affect the product

• What is the payer mix?

• What are the sites of care?

• Who influences adoption, utilization, and reimbursement?

Transparency in approach and methodologies

• On what evidence are the strategic recommendations based?

• How will the work be viewed by a potential partner/licensee?

Capacity to meet tight and inflexible timelines during due diligence

• Can I count on high quality and on time (or early) delivery?

Service after the deliverable

Ask for references of similar projects

Market access partner due diligence

29


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Evidence-Based Value and Access Strategies

129 Church Street ● Suite 614 ● New Haven, CT 06510

+1 203.777.9577 ● www.compass-grp.com

30

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