Strategies to position your product and value proposition effectively with government and commercial payers in a complex and competitive marketplace.

Pricing & Reimbursement US 2020

An abstract from Covington & Burling LLP

The United States (“U.S.”) accounts for the largest share of drug spending and innovation in the world, and its drug pricing regime is the most complex given its multi-payer model and unique overlay of market access requirements that collectively impact drug pricing and reimbursement decisions in the U.S.

The U.S. health care system includes both private and public health insurance coverage. Whether a drug product is covered, and at what price, is determined by each payer’s coverage, coding, and payment criteria for health insurance plans. The largest government-funded
programs are Medicare and Medicaid, under which plans are subject to detailed requirements set forth by statute or regulation. Private plans, which cover far more Americans than public plans, have more flexibility to make coverage and reimbursement determinations. All plans implement various cost containment measures which may impact plan beneficiaries’ access to certain drug products. For Americans that either do not have insurance or have inadequate
coverage to support their drug purchasing needs, a number of public safety net programs or private assistance programs (including manufacturer assistance) may be available to ensure access to needed medications.

Drug prices are highly dependent on the complexities of the U.S. drug supply chain. Between the initial manufacturing and ultimate dispensing of a given drug product, numerous transactions must take place among manufacturers, wholesalers, pharmacies, pharmacy benefit managers (“PBMs”), providers, and payers. These transactions typically involve price concessions in the form of discounts or rebates, as well as other fees. As a result, there is a significant gap between the list price a manufacturer initially sets for a drug product, and the net price reflecting the actual amount of money received.

Successful market access requires navigating this complex pricing and reimbursement system in a way that ensures drug products are available to patients, reimbursable by patients’ private or public plans, and appropriately valued to ensure favorable coverage. These efforts also must comply with overlapping regulatory requirements and minimize risk related to enforcement action for violating regulatory or compliance obligations. Manufacturers should be aware of policy proposals and emerging trends that may significantly affect drug pricing and reimbursement in the U.S.

 

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