The new rules of can­cer care: Re­spond­ing to in­creas­ing CMS in­flu­ence on the on­col­o­gy land­scape

The In­fla­tion Re­duc­tion Act and En­hanc­ing On­col­o­gy Mod­el are in­creas­ing pres­sure on man­u­fac­tur­ers to re­duce costs and dri­ve val­ue-based care. In this ex­tract from the new re­port, “Re­duc­ing the can­cer care gap: Build­ing con­nec­tions to im­prove ad­vance­ment in can­cer pre­ven­tion, di­ag­no­sis, and treat­ment,” pol­i­cy and mar­ket ac­cess ex­perts at Avalere (part of Fishawack Health) ex­plore the in­creas­ing in­flu­ence of the Cen­ters for Medicare & Med­ic­aid Ser­vices on on­col­o­gy prod­uct com­mer­cial­iza­tion in the Unit­ed States and share their ad­vice for suc­ceed­ing in this high-pres­sure en­vi­ron­ment.

Dur­ing the past year, the Cen­ters for Medicare & Med­ic­aid Ser­vices (CMS) has sharp­ened its fo­cus on on­col­o­gy, in­tro­duc­ing new poli­cies de­signed to im­prove ac­cess to trans­for­ma­tive ther­a­pies and dri­ve bet­ter care for can­cer pa­tients. How­ev­er, in de­vel­op­ing these poli­cies, the CMS is, in turn, in­tro­duc­ing sig­nif­i­cant mar­ket dis­rup­tion and in­creas­ing pric­ing pres­sure for man­u­fac­tur­ers. How the bio­phar­ma­ceu­ti­cal in­dus­try re­sponds to these changes to­day will have sig­nif­i­cant im­pli­ca­tions for the on­col­o­gy prod­ucts and port­fo­lios of the fu­ture.

The most sub­stan­tial leg­isla­tive de­vel­op­ment im­pact­ing the pric­ing ef­forts of the CMS is the In­fla­tion Re­duc­tion Act, signed in­to law in Au­gust 2022 by Pres­i­dent Joe Biden to make in­no­v­a­tive med­i­cines more af­ford­able, dri­ve eq­ui­ty, and im­prove out­comes. The act in­cludes a Medicare Part D re­design that caps out-of-pock­et costs and shifts li­a­bil­i­ty across stake­hold­ers, in­clud­ing man­u­fac­tur­ers, gov­ern­ment, and Part D plans.

Un­der the act, man­u­fac­tur­ers will be pe­nal­ized if the price of Part B and Part D prod­ucts ris­es faster than in­fla­tion. The fed­er­al Health and Hu­man Ser­vices sec­re­tary has al­so been giv­en the pow­er to ne­go­ti­ate price changes with man­u­fac­tur­ers on be­half of Medicare. This ne­go­ti­a­tion process will ac­cel­er­ate the com­mer­cial life cy­cle—with small mol­e­cule drugs el­i­gi­ble for ne­go­ti­a­tion sev­en years af­ter ap­proval and bi­o­log­ics el­i­gi­ble for ne­go­ti­a­tion 11 years af­ter ap­proval, at which point rev­enue may de­cline pend­ing ne­go­ti­a­tions.

The En­hanc­ing On­col­o­gy Mod­el (EOM) is an­oth­er ini­tia­tive an­tic­i­pat­ed to dis­rupt the on­col­o­gy land­scape. The EOM is sched­uled to be­gin in Ju­ly 2023 as the suc­ces­sor to the On­col­o­gy Care Mod­el. It is a five-year vol­un­tary pay­ment mod­el span­ning sev­en can­cer types: breast can­cer, small in­tes­tine/col­orec­tal can­cer, lung can­cer, prostate can­cer, lym­phoma, mul­ti­ple myelo­ma, and chron­ic leukemia. The mod­el is de­signed to main­tain or im­prove qual­i­ty and re­duce costs with par­tic­i­pat­ing providers tak­ing on fi­nan­cial and per­for­mance ac­count­abil­i­ty, mea­sured in six-month episodes of care.

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Both the in­fla­tion act and EOM are in­creas­ing pres­sure on bio­phar­ma­ceu­ti­cal man­u­fac­tur­ers to dri­ve down costs while in­creas­ing fo­cus on im­prov­ing care for pa­tients. To suc­ceed in this land­scape will re­quire man­u­fac­tur­ers to re­think their ap­proach to and ex­e­cu­tion of com­mer­cial strat­e­gy.

How are these pol­i­cy changes im­pact­ing man­u­fac­tur­ers de­vel­op­ing on­col­o­gy prod­ucts?

Shali­ni Parekh, Man­ag­ing Di­rec­tor, Mar­ket Ac­cess, Avalere (part of Fishawack Health)

Shali­ni Parekh: Un­der the act, and specif­i­cal­ly with the re­design of Medicare Part D, the pre­scrip­tion ben­e­fit for Medicare ben­e­fi­cia­ries, bio­phar­ma­ceu­ti­cal com­pa­nies will like­ly ex­pe­ri­ence pres­sure on prod­uct mar­ket share and re­bat­ing due to the po­ten­tial for nar­row­er for­mu­la­ries, in­creased uti­liza­tion man­age­ment by plans, and in­creased net plan li­a­bil­i­ty.

Drugs se­lect­ed for ne­go­ti­a­tion will be sub­ject to a max­i­mum fair price (MFP), in­clud­ing those on the mar­ket and ad­di­tion­al in­di­ca­tions un­der de­vel­op­ment. This will im­pact how prod­ucts are se­quenced, re­quir­ing man­u­fac­tur­ers to think dif­fer­ent­ly about the ev­i­dence gen­er­a­tion and val­ue sto­ry. To do this, they will need to re­view the clin­i­cal tri­al de­sign and strat­e­gy to en­sure the best ev­i­dence is gen­er­at­ed to in­crease the MFP, along with de­vel­op­ing a deep­er un­der­stand­ing of the com­pet­i­tive dy­nam­ics of the drugs with­in the class se­lect­ed for ne­go­ti­a­tion be­cause the CMS will ap­ply this lens to price ne­go­ti­a­tion.

Amy Schroed­er, Prin­ci­pal Re­search Sci­en­tist, Pol­i­cy, Avalere (part of Fishawack Health)

Amy Schroed­er: The eye is on clin­i­cal com­pe­ti­tion, which is re­flect­ed in the price. This adds a lay­er to pipeline de­vel­op­ment for man­u­fac­tur­ers to de­sign clin­i­cal tri­als to fo­cus more on com­par­ing their pipeline prod­ucts to stan­dards of care. This shift will sim­pli­fy the meth­ods for com­par­isons that the CMS, clin­i­cal guide­lines, and oth­er en­ti­ties have to make.

Mad­di David­son: Man­u­fac­tur­ers need to en­sure that their com­mer­cial­iza­tion strat­e­gy ac­counts for in­cen­tives of the EOM and tells a clear val­ue sto­ry to mit­i­gate the po­ten­tial im­pact on uti­liza­tion. EOM par­tic­i­pants aim to achieve per­for­mance-based pay­ments by man­ag­ing the pa­tient’s to­tal cost of care and must re­duce to­tal spend­ing by 3-4% to be el­i­gi­ble for per­for­mance-based pay­ments. Drug spend­ing ac­counts for 50% or more of episode costs, so providers will like­ly fo­cus on ways to man­age drug cost in the episode. If two prod­ucts are clin­i­cal­ly equiv­a­lent, the EOM frame­work in­cen­tivizes the use of the low­er-cost op­tion, so man­u­fac­tur­ers need to tell a clear val­ue sto­ry to over­come this hur­dle be­cause the provider will first and fore­most choose the best drug for the pa­tient.

Ad­di­tion­al­ly, Part D pro­vi­sions of the act will im­pact the EOM be­gin­ning in 2025, and it is not clear how the Cen­ter for Medicare and Med­ic­aid In­no­va­tion will ad­dress this over­lap. In 2025, Medicare li­a­bil­i­ty for Part D drugs will change from 80% to 20%. Be­cause the EOM on­ly counts pay­ments made by Medicare to­ward the to­tal cost of care cal­cu­la­tion, this may in­cen­tivize the use of Part D drugs.

How can man­u­fac­tur­ers over­come these chal­lenges and bet­ter nav­i­gate CMS ne­go­ti­a­tion?

Mad­di David­son, As­so­ciate Prin­ci­pal, Pol­i­cy, Avalere (part of Fishawack Health)

Mad­di David­son: The EOM and the in­fla­tion act were not de­signed to­geth­er, but they are not hap­pen­ing in iso­la­tion. Man­u­fac­tur­ers need to align their val­ue sto­ry with providers’ ap­proach­es, broad­en­ing the fo­cus past the EOM and in­fla­tion act to con­sid­er the busi­ness of on­col­o­gy. On­col­o­gy prac­tices have to con­tin­ue de­liv­er­ing high-qual­i­ty care while nav­i­gat­ing com­plex pay­ment mod­els. Man­u­fac­tur­ers should con­sid­er what sort of da­ta can they gen­er­ate to show prac­tices how their prod­uct plays in the broad­er prac­tice eco­nom­ic pic­ture and ac­counts not on­ly for the in­fla­tion act and the EOM but al­so net cost re­cov­ery.

Amy Schroed­er: It re­quires tak­ing an en­tire­ly dif­fer­ent per­spec­tive to un­der­stand the to­tal cost of care, pay­ing at­ten­tion to much more than the prod­uct to con­sid­er how not on­ly the provider makes phar­ma­co­log­ic treat­ment choic­es with the pa­tient but the care oth­ers pro­vide across the pa­tient jour­ney, such as surgery or ra­dio­ther­a­py. It calls for every­one to come to­geth­er and un­der­stand the big­ger pic­ture.

Lau­ra Hous­man, Man­ag­ing Di­rec­tor, Ev­i­dence and Strat­e­gy, Avalere (part of Fishawack Health)

Lau­ra Hous­man: Man­u­fac­tur­ers who ap­proach the ev­i­dence-gen­er­a­tion strat­e­gy ear­ly in the prod­uct life cy­cle, gen­er­at­ing clear­er and more spe­cif­ic da­ta that align with the fu­ture mar­ket, will be more suc­cess­ful in achiev­ing the high­est re­im­burse­ment pos­si­ble for the largest num­ber of users.

By be­com­ing more can­did with in­ter­nal de­ci­sion-mak­ing and mak­ing chal­leng­ing de­ci­sions based on the ev­i­dence and the mar­kets, com­pa­nies will be bet­ter equipped to de­vel­op a com­pelling val­ue sto­ry. This in­cludes con­sid­er­ing the com­para­tor and how your ev­i­dence stacks up against them be­cause that is how the CMS will as­sess the clin­i­cal val­ue as­so­ci­at­ed with that drug or drug class.

Get the full sto­ry in our lat­est pub­li­ca­tion.
Down­load the ebook for the full Q&A with fur­ther ex­pert in­sights on nav­i­gat­ing CMS in­volve­ment in on­col­o­gy drug de­vel­op­ment, along with more ar­ti­cles on:

• In­te­grat­ing pa­tient-cen­tric­i­ty in mul­ti­ple myelo­ma
• Re­spond­ing to CMS in­flu­ence on the on­col­o­gy land­scape
• Why we need to get in­no­v­a­tive about CAR-T ac­cess
• CAR-T: Mar­ket­ing the promise, de­liv­er­ing be­yond the need
• Phase 2 Tri­als: A piv­otal mo­ment for launch suc­cess

Down­load the pub­li­ca­tion.