HCEI and PIE: Is it time for pharma to be proactive in the argument over cost effectiveness?

by Jeremy Schafer, PharmD, MBA, SVP, Precision for Value

In June 2018, the FDA and the US Department of Health and Human Services published final guidance on the presentation of health care economic information (HCEI) and preapproval information exchange (PIE). The long-sought guidance provided manufacturers with the opportunity to engage payers and other access decision makers with meaningful information on how new products may impact budgets and payer spend. With numerous types of data (clinical, disease state, economic, etc.) eligible for presentation via diverse pathways (presentation, reprints, modeling, etc.), drug manufacturers embracing the new guidance have an opportunity to engage payer customers early. But in what way(s)?

The struggle is real

Payers are expected to manage new drugs closer to launch than ever before. Caught off guard when new HCV drugs launched, payers are now even more conservative. Prior authorization to label at launch is generally only the beginning. Many payers may implement restrictions tighter than label or outright not cover a product at all for 6 months or more prior to a review. These delays amount to precious time lost for both the manufacturer and patient. In addition, it gives the manufacturer’s competitors a chance to strengthen their competitive strategy.

Further complicating the situation is the fact that payers are no longer looking simply at the efficacy, safety, and cost of an individual drug. The shift in the healthcare market from volume to value has payers increasingly judging the cost effectiveness of a product. Healthcare dollars are limited and payers, often under stern demands from their groups to rein in costs, are looking to spend those dollars as judiciously as possible. For a manufacturer with a product of unclear value, this can mean restricted coverage for a significant duration of time.

The rise of the cost effectiveness assessment

Assessing cost effectiveness, and even basing coverage upon it, is nothing new in many parts of the world, including Europe and Japan. For the United States, the concept has not been uniform, if conducted at all. However, in 2015, drug cost effectiveness assessments hit the mainstream when organizations like Memorial Sloan Kettering, ASCO, and NCCN rolled out new tools. While these offerings focused on oncology, the assessments launched by the Institute for Clinical and Economic Review (ICER) covered broader categories and leveraged a media strategy that grabbed headlines. ICER’s focus on reviewing drugs at, or even before, launch made them a staple for payers, policy makers, and healthcare outlets. Calls for significant discounts in categories like the PCSK9s and numerous oncology agents not only put manufacturers on notice, but grabbed the attention of payers beginning their own evaluations. Manufacturers, limited by the data that could be shared prior to a drug’s launch, often found themselves at the mercy of these assessments, with limited opportunities to engage payers on the topic until after the damage was done.

PIE changes the game

The PIE guidance allows manufacturers to engage payers about information, including the clinical trial results, patient utilization projections, and pricing information. These ingredients are adequate information for a manufacturer to prepare their own cost-effectiveness assessment. However, important questions remain:

1. Would payers even listen? Payers may be skeptical when presented with analyses and assessments from pharmaceutical manufacturers. A manufacturer choosing to do a preemptive cost-effectiveness analysis to share with a payer should attempt to make the methodology as transparent as possible. In addition, direct costs should be the focus rather than indirect as direct costs are quantifiable for a payer and often paid by a payer. The manufacturer should also strive for balance. Analyses that show a new, expensive specialty product to be associated with incredible cost effectiveness every time may lose the audience.

2. I don’t want to share my pricing information! Including pricing information may be the biggest hurdle for manufacturers to overcome. Pricing strategy is a well-guarded secret and revealing it too early may harm a product or tip off competitors. Manufacturers have a couple of options. They could base their analysis on a cost-effectiveness range, thus showing what theoretical price range the product could have and still be cost effective. Manufacturers in competitive categories could also benchmark an assumed cost based on an average in the category. Either way, it would be beneficial to the manufacturer to present the analysis as close to launch, or before a rival analysis is shown, as possible.

3. What information should I include that other assessments often miss? A common complaint of manufacturers with value frameworks is that critical inputs are missed or neglected, leading to a one-sided story. Manufacturer-generated HCEI provides manufacturers the opportunity to include missing inputs. Manufacturers have significant knowledge in 2 commonly missed areas: the patient experience and the costs of drug development. Including both would add more value to a manufacturer’s assessment and tell a robust story.

4. What if the analysis comes out negative!? In this scenario, the manufacturer may wish to consider whether to share the analysis with the payer or not. Regardless, conducting the analysis, and educating field teams on the result, may go a long way in preparing the organization for the challenges their product will face in the market.

The HCEI and PIE guidance represents an opportunity. An opportunity for manufacturers to show their payer customers what value new drugs provide before coverage decisions are made. Cost effectiveness also helps manufacturers tell a story in a language that payers understand and is applicable to their business.

Manufacturers that embrace the opportunity may find customer interactions more engaging, with improved access as a result. Payers vary considerably in their knowledge and ability to apply HCEI. Some are quite advanced and integrate HCEI into their decision making, while others are still in the learning stage. Manufacturers have the opportunity to serve as partners in the former situation and teachers in the latter.

Manufacturers should consider being proactive in telling their cost-effectiveness value story. Before someone else does it for them…..

References: FDA. Drug and Device Manufacturer Communications With Payors, Formulary Committees, and Similar Entities — Questions and Answers - Guidance for Industry and Review Staff. June 2018.