Market access in 2019
The single greatest and most misunderstood lever to increase revenue?
Market Access is the critical process required to ensure biotech and pharma companies can maximise the clinical and commercial potential of their drugs. It has become as important as receiving Marketing Authorisation Approval, as a drug’s success will be significantly limited without it. Moreover, a successful Market Access strategy does not just make the difference between launching and not launching, it can also add a 20-25% to exponential increase in the revenue your products generate over their lifecycle and significantly enhance the valuation of your company.
As an industry leader or investor, are you capitalising on arguably your greatest lever to increase revenue and share price and deliver treatments to patients?
What is Market Access and how has it evolved?
Market Access, put simply, is the process to enable patients to receive appropriate treatment at the right time and at a price that represents good value for money for patients and healthcare providers. Pricing and reimbursement, its core components, ensure products are approved for funding based on the value payers perceive they add against their price and what patients require. Today, Marketing Authorisation Approval (MAA) is virtually meaningless for successful commercialisation unless you achieve Market Access. It is no longer enough to have a clinically differentiated drug profile; you must demonstrate to payers that there is an unmet medical need that should be addressed or that your product offers improved value compared to existing treatments.
The Health Technology Assessment (HTA) has emerged as the primary means of evaluating clinical and/or economic value. Value frameworks are now used by a growing number of authorisation bodies as pressure grows on payers to more precisely identify what value a treatment offers vs. alternatives and its cost. The UK’s NICE, arguably the most advanced HTA body, has progressed towards more critical assessments of budget impact. Even the USA’s free-market system is evolving and following in the footsteps of the UK and others, in large part due to ICER proposing that cost-effectiveness measures, such as value thresholds and quality-adjusted life year (QALY), be incorporated into assessments.
A successful Market Access strategy must first understand the burden of disease and identify the limitations of the current standard of care. You need to demonstrate proof of concept and generate data from pivotal trials, which must then be complemented with real world evidence (RWE) to make certain that the strongest possible value proposition is put forward to regulators and payers. Indication sequencing for price optimisation is also essential, as is establishing a viable pricing corridor that manages risks from international price referencing and the reality of cross-border parallel trade.
Failure to plan for and execute a high-quality Market Access strategy can cost your company millions or, in some cases, billions of dollars – without it, a drug may not gain approval and will never realise its full commercial and clinical potential.
Are you neglecting Market Access? If so, why?
Simon-Kucher’s 2017 Global Life Sciences Study found that the most commercially successful companies (defined by measures such as EBITDA and hit rate of innovations) have C-suites that provide clear guidance and direction on pricing decisions, and the majority have defined pricing roles. Crucially, companies with an EBITDA over 20% are significantly more likely to take payer requirements into account in early product development compared to less profitable companies. The study also found that Market Access and Pricing teams play a key role in assessing M&A, partnership and licensing opportunities, yet only 32% of companies currently do so.
Despite mounting evidence demonstrating the value Market Access delivers, why do some companies still not plan early or effectively enough for it?
Here are some of the reasons for this:
- Cost – a common mindset, particularly within biotech companies, is to keep costs as low as possible and delay spending on Market Access until MAA is likely to be achieved. Focus on spend is instead on clinical development, regulatory experts and CROs to run trials. Not planning and executing a high-quality Market Access strategy is a mistake many make, ironically, to their cost.
- Understanding – industry leaders and investment firms are often not fully aware of precisely what an international Market Access strategy involves, its impact, and therefore its importance alongside clinical proof of concept and pivotal regulatory studies. The problem is further exacerbated by increasingly complex and sophisticated pricing and reimbursement processes and requirements. There are also some common misconceptions associated with early external engagement, such as early scientific advice (ESA) is binding – this is not the case and any advice given is confidential.
- Appreciation – a drug’s value is increasingly based on your ability to deliver clinical and economic evidence to justify the desired price against stricter measures. Industry leaders and investment firms often don’t appreciate that an early and coherent Market Access strategy is crucial to ensuring clinical development plans take payer evidence requirements into account, and any evidence gaps are bridged with real world evidence (RWE). The wider impact this can have on your revenue (estimates range from a 20-25% increase to exponentially more – see next section) and, at times, survival is also underestimated.
- “Passing the burden” – some biotech companies looking to sell on their assets or be acquired perceive Market Access as late-stage work and, as such, look to “pass the burden” to the next owner and avoid the cost, especially when the acquirer may already have the people and infrastructure to undertake it. However, Market Access considerations are a significant part of any due diligence process underpinning decisions on whether or not to acquire or partner with another company. The absence of Market Access insights driving decisions relating to clinical development and candidate/indication selection will see you achieve lower valuations and companies pass on opportunities to partner or acquire.
How can getting Market Access right benefit you and your patients?
In the worst-case scenario, you face being rejected by payer authorities, meaning you must start a timely and costly resubmission process or risk your asset failing altogether. With the average cost of developing a drug currently at $2.8 billion, this is a very steep price to pay indeed.
Getting Market Access right, however, has several major advantages:
- Increased revenue – multiple subject-matter experts in the industry I have spoken to over the last 2 years conservatively estimate that a successful well-executed Market Access strategy will deliver a 20-25% increase on a product’s revenue over its lifecycle. Others feel this is a significant underestimation and that the impact on revenue is exponentially higher. This is a major opportunity to increase profit margins by a meaningful amount that many are not taking full advantage of, bearing in mind that in 2017 the average net profit margin of a company in the pharmaceutical industry was 13%, according to a study by New York University’s Stern School of Business in January 2018.
- Higher company and asset valuation – biotech companies looking for strong valuations of their assets and organisation will benefit significantly. Your decision to invest in and prioritise Market Access and not “pass the burden” to a future owner will have a favourable impact on your company’s valuation and will grow your potential return where you retain the right to receive downstream royalties on generated revenue.
- Avoid delays to launch and associated costs – the cost of every week lost in a delayed launch is magnified hugely through loss in lifetime NPV (net present value), as is the potential negative impact from losing the first-mover advantage if a product is first-in-class and alternatives come onto the market, increasing competition and making it harder to achieve optimal pricing. Revenue would be further compromised now product lifecycles are getting shorter.
- Strategic launch sequencing and optimal pricing – a Market Access strategy will enable companies to identify which indication should be chosen to launch first to ensure price optimisation. This is crucial to the potential of a product internationally once the powerful price referencing effect is taken into account; many European, Asian and African countries look to prices agreed in Germany, France and/or the UK among others to help determine what they pay for a product.
- Greater patient access – there is an important ethical consideration here too; if you lack the evidence and face a compromised or delayed launch, treatments will not reach some patients in time whilst others won’t receive it at all. Using a Market Access strategy to mitigate these risks will allow a treatment to reach the greatest number of patients in the shortest possible time.
The reason for undesired outcomes is often debated. Could the following three cases be examples of a compromised Market Access strategy?
- After GSK received regulatory approval for its first-in-class treatment of lupus, Benlysta, it was disappointed to learn that UK, German and French authorities had given it a negative appraisal as their clinical data did not meet the information needs of payers, despite satisfying the needs of regulators. Some argue this could be seen as an example of “passing the burden”, for when GSK acquired Benlysta from Human Genome Sciences, phase III trials had already been completed and it quickly became clear that Market Access and HEOR had not been a key consideration, resulting in the negative decisions and subsequent increase in costs and fall in revenue.
- In the US, Wellpoint, a major health insurance company, conducted its own comparative study of Genentech’s osteoporosis treatment, Boniva, against two alternative treatments. From RCT data, it appeared the three drugs should be equivalent; however, Boniva scored low on their cost-effectiveness measure, so Wellpoint required its members to try other products first before they could gain authorisation for Boniva.
- In a surprise move by AstraZeneca to gain NICE approval in 2010, they offered Iressa, a lung cancer drug, at a fixed price regardless of the length of treatment and agreed not to charge for patients who used the drug for less than 3 months, a significant compromise at the time. In 2014, NICE reversed its earlier decision and withdrew its endorsement of Iressa due to a lack of an evidence submission. In this case, it is likely a lack of planning and evidence led to a compromised outcome.
If you as industry leaders and investors embrace and prioritise Market Access, you will maximise your ability to realise the full clinical and commercial potential of your products.
So, what needs to be done?
Following discussions with pharma, biotech and Market Access leaders, here are six steps which they recommend:
- Make Market Access a priority – it should be recognised by other functions internally and, where relevant, by investment firms as a critical part of a successful asset strategy and should be integrated with clinical development, medical affairs and regulatory approval. A strong case could also be made for having Market Access as an independently represented function at board level.
- Plan ahead and start early – many argue that Market Access should be a key consideration at the end of phase I trials or at the beginning of phase II, once you start to get an indication of the potential of your product. Others believe steps should be taken as early as possible, often during the pre-clinical stage. Trials should have both clinical and economic endpoints to ensure sufficient data is generated to support strong economic arguments. If Market Access plans are not in place following the pivotal trial, then it is almost certainly too late and your ability to gain reimbursement at an optimal price will be heavily compromised.
- Early external engagement – regulators and payers should be consulted as early as possible, including through joint early assessments like EUnetHTA, to ensure you identify potential evidence gaps which can then be bridged by HEOR evidence and RWE; this is being increasingly facilitated through ESA. Early engagement is particularly important for treatments in areas of unmet need, including those given ‘Breakthrough’ (US), PRIME (EU) and ‘Sakigake’ (Japan) designation, whereby an MAA may be filed as early as phase II. External engagement is also essential for health prioritisation and its impact on funding. RWE can be leveraged to raise awareness about the importance of a disease, level of unmet medical need and limitations of standard of care so that funding is available by the time a company is ready to launch.
- Hire the best talent – you need talented and experienced Market Access leaders and teams of functional experts to drive the necessary processes. It is paramount that they have technical expertise in health economics, outcomes research, strategic pricing, patient-reported outcomes, and RWE among other areas, with impactful scientific publications and a demonstrable track record of successful product launches at local and global level.
- Allocate sufficient resources to Market Access – the growing complexity and sophistication of pricing and reimbursement processes means more time and resources are required to ensure success. Market Access teams will deliver far more value if time is not wasted on departmental infighting for resources. Also, to add perspective, a network meta-analysis costs a fraction of a single-arm phase III study and yet will often deliver HTA evidence needs far beyond the limitations of such studies.
- Deliver a strong payer message – following the previous steps will allow you to create a strong payer message demonstrating the impact on burden of illness, cost-effectiveness and budget impact, as is increasingly being required. This will provide the strongest clinical and economic case which clearly addresses payer evidence requirements and therefore justifies the true value of your asset.
A strong case has been made that biotech and pharma companies and investment firms cannot afford to underestimate the importance and potential value of having a coherent Market Access strategy in place at an early enough stage. As countries increasingly look to curb spiralling healthcare expenditure and payers and regulators progress their assessment of treatments to maximise value and minimise costs, the field of Market Access will surely continue to grow in significance.
With the right people and processes, companies can engage regulators and payers and conduct landscape analyses early to determine potential uses for and the pricing potential of a drug. A clear and strong HEOR evidence development plan must then be created and executed, including RWE; this will ensure sufficient and compelling clinical and economic evidence is generated to maximise the possibility of swift reimbursement across all desired indications at the optimal price.
Ultimately, having a clear, board-backed Market Access vision and strategy will enable you to realise the full clinical and commercial potential of your assets, thereby increasing your revenue by 20-25% to exponentially more, and the value of your organisation should you wish to sell or be acquired. Crucially, it will ensure that medical treatments are delivered to as many patients as possible, the most fundamental aim of all.
Head, Executive Search Delivery
References & Further Reading