Biotech executives reveal 4 strategies they use to convince health insurers to cover new drugs
Crystal Cox/Business Insider
- Small and mid-size biotech companies are increasingly launching the drugs they develop, rather than getting added to the portfolios of larger pharmaceutical companies with established teams to sell the drugs.
- Launching a drug successfully - that is, getting insurers to cover the cost of the new treatment - isn't as easy as proving the drug is safe and effective. Often, governments and private insurers require more evidence that it's worth it to pay for the drug.
- Business Insider spoke to biotech executives at the BIO CEO & Investor Conference in New York on Monday to break down what all companies need to do to get it right.
- Click here for more BI Prime stories.
Beyond showing their drugs are safe and effective, biotech companies are increasingly on the hook to prove why insurers should cover their new drugs.
That is, biotech companies need to prove to insurers and governments why they should cover the cost of a medication, by providing evidence that it will improve the life of a patient in some way, for instance, or save the insurer money later down the line.
To get on the market, new treatments need to pass the muster of the Food and Drug Adminstration, which vets the drugs to see if they've proven to be safe and effective. But getting past that hurdle doesn't necessarily mean the drug will get covered, particularly if it comes with a high price tag.
At the annual BIO CEO & Investor Conference in New York on Monday, executives behind large and small biotechs shared what drugmakers need to do to get it right.
They explained why it's critical to build ways to capture the evidence that makes the case for coverage for a particular drug early, and the importance of being ready for things to go wrong. Here are the 4 considerations every biotech executive team should keep in mind.
Never miss out on healthcare news. Subscribe to Dispensed, our weekly newsletter on pharma, biotech, and healthcare.
Above and beyond all else, the executives agreed, it's important to think about proving why your drug should be covered earlier than ever in the development process.
"I think the key thing is to think about it early," Synlogic CEO Aoife Brennan said. "For me that's my biggest learning through success and failure."
For companies that are discovering new molecules that could one day become drugs, bringing on a staff that would prepare the drug for launch isn't necessarily an option. But if you wait to consider the evidence you'll need to prove the worth of your drug to insurers until then, it'll be too late.
"You're too late, if you're starting two years before launch," Brennan said. Instead, companies should be thinking about it when they initially submit their drug for human trials.
In particular, companies have to think about patients and what they'll ultimately want out of a new treatment.
"We can think about a really simple framework that starts with the patients and really understand even before you speak to FDA, who is that patient? And what are they going to require your product to solve for them?" Brennan said. "I've learned most in situations where I thought I understood that."
For instance, Brennan's company is developing a treatment for phenylketonuria, a rare genetic condition that leads to a buildup of the amino acid phenylalanine in the body. At first, Brennan spoke to experts on the disease who told her it would be great if the company could show it could lower the amount of phenylalanine in the body by a certain amount.
But then, Brennan's team spoke to patients and parents. Their priorities were much more focused on being able to get rid of the brain fogginess they were experiencing, or making it easier to enjoy reading a book.
"As CEO of a small company, this wasn't good news to me," Brennan said. Lowering levels of phenylalanine would be easy to measure in a blood test as part of the clinical trial. The priorities the patients and families had mentioned, on the other hand, were a little less clear.
"I knew that we had to start right then," Brennan said, even before the clinical trials had kicked off. She'd have to include some of those measures that were important to patients from day one in human trials.
Understand the problem
Jing L. Marantz, head of medical affairs at Alnylam Pharmaceuticals, recalled an Albert Einstein quote that sums up her approach to finding the evidence a company will need to prove the value of a drug.
When asked how he'd spend time solving a problem if given an hour, he said he'd spend 55 minutes defining the problem and five minutes actually solving it.
The same is true in biotech, Marantz said.
"Really understand what the problem is that you would like to solve, and understand the stakeholders that play a role in that proper chain and then solve it," Marantz said is her advice to biotech companies looking to get this right. "Take time to think about what the problem is and then solve it."
Have a strategy
Stacey Seltzer, partner at Aisling Capital and Shawn Tomasello, board member at Urogen and former chief commercial officer at Kite Pharma agreed: It's important to think through all the possible outcomes and have a strategy for each.
"As a company you want to think about the best case scenario," Seltzer said. But the best management teams out there think through all the different scenarios: the good, the bad, and the spectrum within, she said.
"You have to have a strategy for success and a strategy for failure," Tomasello said. "That doesn't mean to make it happen, but you have to force yourself to sit down and be honest with yourself about this program that you're in love with and knowing the strategy for success or failure. "
Have a partner
Carolyn Magill is the CEO of Aetion, a company that analyzes data collected from outside of clinical trials and works with biotechs to turn that data into information that can be used to prove the value of a particular drug.
"I would predictably choose a partner who can help you approach this in a reliable way that's consistent with standards that are evolving and bring a level of transparency and replicability," Magill said.
"Much of the work that's done on our platform helps to articulate findings in the same context that payers in particular will respond to. "
For instance, she mentioned an instance in which health insurer Horizon Blue Cross Blue Shield in New Jersey used Aetion to look more closely at its members living with diabetes. Looking through the data Aetion analyzed, the company realized there was a subset of its members that should have been on a more expensive drug sooner, a group of treatments known as SGLT2 inhibitors which includes drugs like Jardiance and Invokana.
The pharma company who made those drugs could take that information to prove out what impact the drug could have if used sooner, and what that might mean for how the drugmaker priced its drug for the insurer. That is, perhaps it could change its contract with the insurer to get paid based on whether the drug helped keep the member healthier.
Featured Digital Health Articles:
- Telehealth Industry: Benefits, Services & Examples
- Value-Based Care Model: Pay-for-Performance Healthcare
- Senior Care & Assisted Living Market Trends
- Smart Medical Devices: Wearable Tech in Healthcare
- AI in Healthcare
- Remote Patient Monitoring Industry: Devices & Market Trends
- Not hard, not soft, the earliest dino eggs may have been of a 'leathery' texture to protect against damage: study
- Don't need to go big to go home: Australia is turning to sustainable 'tiny houses' to fix their housing crisis!
- Affordability levels to buy homes hit in last 2 years; to improve in 2024 on likely repo rate cut: JLL
- Carbon tax turns into climate fight at COP28
- Market to focus on macro data, global trends: Analysts