With IRA Impacts Looming, Manufacturers Should Focus on Providing Patient Support

Most industry experts likely would agree that certain provisions in the Inflation Reduction Act (IRA), such as a $2,000 out-of-pocket spending cap for Medicare Part D beneficiaries and copay smoothing — known as the Medicare Prescription Payment Plan (M3P) — are no-doubt wins for patients. But other aspects of the law, particularly Medicare drug price negotiations and inflation-based rebates, have prompted disagreements over their ultimate outcomes, with some experts claiming that they will hurt drug development and will prompt more restrictive utilization management among payers. Ultimately, said pharma industry experts during a recent webinar, stakeholders should keep patient support top of mind as they navigate these changes.

The IRA “has been game-changing for pharma,” declared moderator Chris Dowd, senior vice president of market development at ConnectiveRx, the sponsor of the June 4 webinar.

Dowd asked panelist Sarah E. Butler, chief commercial officer at ADVI Health, if she could rank where manufacturers’ fear level was in regard to the IRA. Noting that it ultimately depends on their portfolio, she said that she would rank the average level as 7.5. But, she added, for those companies currently going through the drug negotiation process, it’s at 10 or 11.

Butler said she sees four areas in which manufacturers are thinking about adjusting their commercial strategies:

(1) The indication pursued when a drug launches and then the sequencing of future uses: Previously, companies were incentivized to launch in a condition for a smaller patient population because they could continue to make money on the drug while researching additional indications.

But now companies will face harder decisions on that initial indication because “then the clock starts ticking for them to be selected for IRA negotiation, so I think we’re going to see companies start to adjust their launch strategies and launch with indications that offer the greatest economic value the earliest.”

(2) Launch price planning: “It’s a new game now because manufacturers have to figure out how to delay” their drug being placed on the negotiation list. “Looking at volume projections is more important than ever because you can have a medium-priced or even a lower-priced drug, but if the volume goes crazy, you’re going to be on that list sooner than you might think.” Dynamics such as the level of competitiveness of the market will come into play as well.

(3) Initial launch markets: Companies might choose to launch in the EU or Asia before the U.S. so they can continue studies on the drug and prepare for filing in the U.S. This, she said, may result in backlash from stakeholders if “there is access to groundbreaking medications in other markets and not the U.S.”

(4) Investments in R&D: She acknowledged that this wasn’t necessarily a commercial aspect but pointed to several studies about the IRA’s potential negative impact on research and development. “Manufacturers have to choose how to respond to this in different ways. Some may consolidate their resources around fewer products and lower investments in Phase I and II.…Others could pursue assets they might not otherwise opt to pursue, and some may discontinue trials.”

All of these dynamics can impact patient access to therapies.

Benefit Designs Will Be More Complex

Butler cited research by ADVI Health that found that among the 6.2 million Medicare beneficiaries who are hitting the $2,000 out-of-pocket threshold, 42% are taking at least one of the first 10 drugs being negotiated, which will “create an interesting dynamic in Part D,” where benefit designs will become more complex.

Part D plans must cover the negotiated agents, but no guidelines exist as to how they cover them, so plans may place drugs on higher formulary tiers and put tighter utilization management tactics in place, resulting in higher costs for beneficiaries.

Butler pointed to a Cencora managed care survey that found more than 44% of plans are forecasting that the IRA will have an adverse financial impact on them, and “most of them expect that they’re going to offer more restrictive utilization management due to the financial liabilities for Part D plans.” In addition, “42% of plans said that they’re anticipating greater utilization management across the board.”

The M3P program is going to impact manufacturers’ customers, she pointed out. Even though the IRA was passed in August 2022, guidance on this aspect of the law is still being released, and companies “need to stay on top of it” to understand implications for patients, pharmacists and providers for their Part D reimbursement.

“Patient education is absolutely critical for when ushering in new legislation, new rules, new laws that are going to be impacting them directly,” added Richard Fahrer, oncology marketing director at Pfizer Inc. “We know that an informed patient has a greater duration of therapy, shorter hospital stays and improved outcomes.”

He said that Pfizer and other manufacturers have put together information for patients on how the IRA will impact them “in terms that they can understand.…It’s not so simple as just Googling it online.”

Copay smoothing and the $2,000 out-of-patient cap are “absolute wins for patients,” he maintained, but they need to understand how they work to benefit from them. But beyond making sure that patients and their caregivers understand what the IRA means, pharma companies also need to educate their own employees.

Dowd noted that both manufacturers and payers are taking on more of the financial burden, and as that cost sharing shifts, patient affordability may become an issue.

There is “tons of pressure coming in on brands’ P&L [profit and loss],” observed Fahrer, not only from various aspects of the IRA but also copay accumulators and maximizers. Such programs “are eating away at the P&L. Brands are going to be squeezed and forced to make hard decisions, and that might be adjustments to copay assistance programs; it might be adjustments to hub eligibility criteria — who they’re able to service, how much free drug they’re able to give out. As we squeeze those products’ P&Ls, something has to give.”

With copay affordability programs, “the pie is only so big, so what can we continue to pay for and not pay for, and what makes sense?” asked Don Sawyer, senior vice president of market access at Stemline Therapeutics, Inc., a Menarini Group company. “Are there redundancies built into some of those programs? How do we trim them such that the patient liability is lower?”

Two thousand dollars, he asserted, is still a lot of money for these beneficiaries, many of whom cannot afford that.

Will Rebate Dollars Increase?

Payers, he projected, are “going to buckle down and shrink their risk” as IRA implementation comes into play. Manufacturer negotiations with them will become “much more extreme. They’re going to leverage everything they possibly can do. Are they going to actually shrink classes or go to more brand-for-generic or more generic products or biosimilars? But be careful here, because they rely on the rebate dollars significantly as well, so they’ve got some math to do there as well.”

Manufacturers likely will have to boost their rebate dollars in order to retain their drugs’ formulary status and make sure patients can access their drugs, he said.

Drugmakers also are going to need to make sure that they have educated their hubs on the IRA because they are going to get questions, and they need talking points that they can share with patients, recommended Fahrer.

Butler suggested that manufacturer hubs may have a broader role to play than providing traditional patient services.

“If I were a hub services vendor today, the thing I would be looking into is, could the hub actually be an intermediary to get patients enrolled in [the M3P]?” she said. “That’s going to be a little bit tricky in 2025” because patients must enroll via paper, telephone or online application, but not at the pharmacy counter. Plans, however, must notify a pharmacy if one of their beneficiaries will be spending at least $600 out of pocket on a covered Part D drug and is not in the M3P. The pharmacy then must inform the individual about the program.

“But then the patient has to go home and then enroll,” Butler said. “So who’s that patient going to call? It’s going to be a little bit tricky. So I would be thinking about, is there an opportunity there? It just seems like something that will be a little bit clunky for the next couple of years.”

“There is a niche there to be filled,” agreed Sawyer, but he wondered if companies could contract for those services and whether that would be considered steering, causing a legal issue for manufacturers. “But there has to be a way, and I think that’s something that really needs to be looked into because much like we contract…on adherence and compliance programs and patient contact, there’s something here that I think is well worth exploring.”

Sawyer said that he thinks payers will increase their premiums “to backstop themselves,” also negatively impacting patients in addition to more restrictive formularies. “There’s a lot happening here.”

Among the goals of the IRA were lower prescription drug costs and insurance premiums and expanded access to health care. But, said Butler, there actually could be fewer Medicare Part D plans next year, fewer drugs in development, fewer plan options and more restrictive benefit designs.

“If we did all of this to improve access to patients,…it will be really interesting to see if, overall, the IRA accomplishes the goals it set out to accomplish,” said Butler.