Implications of IRA, GLP-1s, CGTs Are Top of Mind for Payers

The pharmaceutical industry continues to bring innovative therapies to market, but payers are continuing to grapple with how they can manage their financial impact. And while the Inflation Reduction Act (IRA) may bring some relief to Medicare beneficiaries in the form of lower drug prices and out-of-pocket costs, uncertainties remain about how that legislation could impact commercial payers, according to speakers at AHIP’s 2024 Medicare, Medicaid, Duals & Commercial Markets Forum, held March 12 through 14 in Baltimore.

During a March 13 session, titled “Trends in Prescription Drug Affordability, Innovation and Access,” a large part of the panel discussion focused on the IRA, which put “a lot of pressure on all parts of our health care system, but pharma got the brunt of it,” observed Rena Conti, Ph.D., associate professor at Boston University’s Questrom School of Business. While much of the focus from pharma and politicians has been on the drug price negotiation process, the Medicare Part D redesign “is actually a really big thing, because that’s what’s going to lower prices for seniors,” she asserted. “And it also will put a fair amount of pressure back on plans to manage this benefit.”

The IRA could have a couple of possible impacts on commercial plans, said Conti. One is that states and health plans will see those negotiated prices and say, “We’ll take that, too, please,” bringing down prices for both entities. An alternative version is that “drug companies do have a fair amount of pricing leverage, and for products that they have leverage on, they may instead act differently” by taking that price cut on the Medicare side but finding ways to increase prices on the commercial side “either outright or by reducing the discounts and the rebates that they’re providing to health plans.”

She wondered whether this might prompt companies to exit out of the 340B Drug Pricing Program or to offer more limited distribution of their products.

“It is a multilevel game of chess that nobody’s figured out yet,” remarked moderator Tony Barrueta, senior vice president of government relations at Kaiser Permanente.

“There should be public deliberation by an independent group like a MEDCAC [Medicare Evidence Development & Coverage Advisory Committee]” not only on the maximum fair price but also “the evidence that is generated and provided by manufacturers to defend the pricing,” maintained Daniel Ollendorf, Ph.D., chief scientific officer and director of Health Technology Assessment Methods and Engagement at the Institute for Clinical and Economic Review (ICER).

“It should operate in some ways similar to MEDCAC, but it should also be different in other ways,” with lessons from international technology assessments, he stated. “There has to be an assessment or an understanding of” the drugs’ value, which should be possible since negotiated drugs will include small-molecule agents that have been approved for at least nine years and biologics approved at least 13 years.

Ollendorf noted that while CMS’s initial prices have not been made public, the agency has talked about taking a qualitative approach, but “we think that there are ways to do more quantitative work to support the price offers.”

The IRA also is impacting state prescription drug affordability boards (PDABs), as some of them are referencing maximum fair prices to set upper payment limits, pointed out Hemi Tewarson, executive director of the National Academy for State Health Policy (NASHP).

CGTs, Obesity Drugs Could Have ‘Massive Impact’

New treatments for obesity and cell and gene therapies (CGTs) for conditions like sickle cell disease “have the potential to have a massive impact” on health care costs in the United States, noted Barrueta.

Some CGTs “represent the potential for pretty significant innovation,” such as those that could “save the life of a child with a rare and fatal disease,” said Ollendorf. But many of the agents have a lot of uncertainties around them at the time of approval, such as the length of time that they may be effective. In addition, because many genetic disorders “are surprisingly heterogenous,…it’s not as though a cure for one patient is necessarily going to be a cure for another.” And it’s “difficult to tease out the uncertainty” with extremely small clinical trial populations.

Payers are looking at various approaches to manage that uncertainty and the products’ high costs, such as outcomes-based contracts, subscription approaches and stop-loss insurance.

Ollendorf noted that the IRA has prompted discussions around whether the law would cause a decline in development for small-molecule drugs, and the glucagon-like peptide 1 (GLP-1) agonists may be a test of this, as they are “front and center.” He compared them with the direct-acting antivirals for hepatitis C that were “highly valuable from an individual patient perspective, but they also represent budget shocks….The upfront pricing choices made have massive social consequences in a lot of respects.”

Conti pointed out that chimeric antigen receptor T cell (CAR-T) therapies have been available since 2017, but access issues have impacted the agents’ uptake. “When we looked to see how people were actually getting access to these therapies, it was largely in the clinical trial setting,” where drug companies are paying for the treatments. “So that tells you they’re worried, and they’re trying to think about how they can provide more evidence” to gain more use.

Unlike other conditions with treatments that plans can require patients to step through, CGTs usually do not have alternatives that patients can try first, she said. “This is the only standard of care, and doctors want this,” so “other tools to handle these therapies” will be needed.

Lauren Aronson, executive director of the Campaign for Sustainable RX Pricing (CSRxP), said she agreed but added that “if we learn anything from the experience of Aduhelm, is that we need to be cognizant of what the clinical efficacy is.” That Alzheimer’s drug from Biogen Inc. and Eisai Co., Ltd. was granted accelerated approval in June 2021, but Biogen revealed in January that it was discontinuing the agent’s development and commercialization.

“So as we’re thinking about these new innovative drugs, making sure that the efficacy is there is pretty important, particularly with the FDA approving more drugs than ever under the accelerated pathway,” she continued. In addition, balancing innovation and affordability will need to “go hand in hand.”

States in particular will be grappling with these issues, pointed out Tewarson, because once the FDA approves a drug, Medicaid must cover it. A lot of people qualify for the GLP-1s, and while relatively fewer may be candidates for CGTs, their high costs pose an issue. “They don’t have choices about how to manage the costs of that.” There needs to be a way “to collectively think beyond the levers we have now.”