Originally published on Drug Channels Institute as a guest post from Chris Dowd, ConnectiveRx SVP of Market Development.
The Inflation Reduction Act of 2022 (IRA) introduces prescription drug pricing reforms that are expected to have substantial adverse effects on the revenues and profitability of pharmaceutical companies. The IRA requires the US Department of Health and Human Services (HHS) to negotiate drug prices, introduces penalties for drug price increases greater than inflation, and puts manufacturers on the hook for 20% of catastrophic care costs for Part D patients whose spending exceeds the $2,000 out-of-pocket (OOP) cap.
The USC Schaeffer Center for Health Policy and Economics reports that “taken together, these provisions have been estimated to lead to an approximately 31% decrease in US pharmaceutical revenues through 2039 and result in 135 fewer new drug approvals.” Similarly, an analysis from 5POINT10 predicts a more than 20% hit to operating income of global biopharma (even more in the United States).
Despite the swirl of challenges brought on by the IRA, brand leaders must keep their focus on the day-to-day work of helping patients access—and pay for—their medications. So, let’s think through the likely effects of the IRA on hubs, means-tested patient assistance programs (PAP), and affordability support programs (for eligible patients with commercial health insurance).
What Will Stay the Same?
The enrollment, verification, coordination, financial support, and fulfillment processes of patient-support programs will remain essentially unchanged. For example, changes in drug prices and program business rules occur every day across the industry, and patient-support systems have robust technology and procedures to manage them seamlessly.
Likewise, benefit verifications (BVs) will continue to rely on electronic pings or phone calls to payers to establish patients’ coverage and OOP responsibilities. Furthermore, Medicare Part D has undergone many changes since its inception in 2006, with numerous adjustments to deductibles, copays, and coverage phases. Through all these modifications, well-managed patient support programs have continued to serve their stakeholders expertly, and they will continue to do so as the IRA rolls out.
One process-related aspect that may change is related to the smoothing provision of the Medicare patient’s $2,000 max OOP Part D cost. The Medicare Prescription Payment Plan (MP3) allows for the smoothing of OOP costs over the course of the year. However, the success of this program hinges on robust patient enrollment, and patient-support programs may need an added focus on educating beneficiaries and assisting them with enrollment.
What Will Change?
Even though the functional processes of patient-support programs will remain largely intact, the IRA still promises to land a one-two punch against these crucial services.
First, for many manufacturers, the IRA’s downward pressure on revenue and profit will force reduced spending on support for all brands, not just those with heavy Medicare use.
Second, as payers respond to their own IRA-related increased costs, they will likely increase their utilization management tactics (eg, formulary exclusions, advanced tiering, PAs, step edits, accumulators/maximizers, alternative funding, etc.), amplifying the pressure on access and affordability.
In the end, brand managers are likely to see reductions in their budgets for hub, PAP, and affordability programs. How will marketers and their service partners adjust to the “do more with less money” challenge? The options are seemingly endless, but here are 4 examples of adjustments that can help brands absorb budget reductions without shortchanging patients:
- Automate to increase efficiency. For example, to streamline annual hub-program reverification, deploy system-generated messages for patient opt-in and use AI-guided voice response to assist with BVs.
- Develop more efficient ways to support patients. For instance, electronic BVs can automatically include a PAP eligibility determination if the BV results show the patient is uninsured/underinsured.
- Revert to more sophisticated, but less expensive, affordability support. Rather than using fixed offers and benefit caps in copay programs, modify both the offers and the caps to reflect a variety of dynamic scenarios (eg, by NDC, OCC, Primary Reject Code, State, and/or Group).
- Rethink the staffing model to add flexibility and reduce cost. Instead of assigning full-time staff for case management, account specialist services, and reimbursement support, use a more cost-effective blended model that includes both FTEs and transactional services that are priced based on usage.
While the IRA may necessitate a shift in approach, the core mission of ensuring patient access and affordability remains unchanged. Through innovation, adaptability, and a steadfast commitment to patient well-being, brand leaders can navigate this new era and continue to make a positive impact on the lives of those who depend on their medications.
To learn more about how brands can continue to offer robust patient support despite IRA challenges, watch our webinar "Bracing for Impact: The Future of Hub, PAP, and Affordability Programs Under the Inflation Reduction Act" on-demand by clicking the banner below.