By Jeremy Schafer, PharmD, MBA, SVP Precision for Value
On October 28th, Congress unanimously passed HR 2115 into law, implementing a variety of new requirements in healthcare transparency. One component of the bill will require Medicare D plans to provide patient cost-share information for a product, as well as clinically appropriate formulary alternatives, via the electronic prescribing records used by providers. The goal of the provision is to allow providers and patients to view the patient cost share of different treatment options before the prescription is written. The bill is a win for providers and patients seeking to select lower-cost options for patients and for manufacturers of generics and less expensive brands or biosimilars. Payers, after an initial implementation cost, will similarly benefit. However, the bill may represent a threat to brand manufacturers in classes with lower-cost competitors, and these manufacturers need to be prepared.
Part of the challenge for brand products with low-cost competitors is how the standard Medicare D benefit functions. At multiple points in the standard benefit, patients pay a percentage of the drug cost. In the catastrophic phase for example the patient pays 5% on each prescription. Assume a patient being treated for cancer has two options: a brand product that costs $10,000 per month and a generic that costs $2,000 per month. In the catastrophic phase, the patient’s monthly cost share for the brand and generic would be $500 and $100, respectively. Prior to HR 2115, the provider may not have been aware of the patient cost difference and simply written for the product the provider preferred. Post HR 2115, the difference will be visible, and in some cases, pronounced. The above example may be extreme but with more specialty generics and biosimilars releasing, marked differences in patient cost are possible.
The other complication for brand products in competition with lower-cost alternatives is that it is highly unlikely that financial support options will be factored into the patient cost-share information. Even in Medicare, where manufacturer copay programs are prohibited, patients often find support through foundations. If the EMR does not display foundation information, and it likely will not, the higher-priced brand will be even less attractive.
So what is a brand manufacturer in competition with lower cost alternatives to do? First and foremost, differentiating the value of the brand compared to the competitor in the eyes of the provider, patient, and payer is crucial. A product with a higher cost may be worth that higher cost if the product delivers a truly superior outcome. Second, to the extent the manufacturer is able, providers and patients should be educated on patient support options, including foundation support. Finally, recommending that providers send prescriptions to a hub-based program may help identify patient support options before the point of patient payment and help reduce the cost burden.
Cost transparency in healthcare is an emerging trend that will continue to expand. Each change in transparency will produce risks and opportunities while improving the healthcare environment as a whole. Understanding these risks and opportunities, and reacting appropriately, will be key for each stakeholder to embrace the changes.