patients. This leaves them with less
in their budgets to cover the lion’s
share of their insured population.
Payers have two tools in their
arsenal to address this economic
challenge. Either they can negotiate
with pharmaceutical companies for
deeper rebates, or they can aggressively manage patient access to
launch brands. As we shall see, they
have been using both tactics heavily.
Figure 4 shows that in recent years,
payers have been successful in getting steeper price concessions from
manufacturers. Consequently, the
industry’s net price growth slowed
sharply in just three years—from
9.1% in 2012 to 2.8% in 2015.
Payers can limit patient access to
expensive launch brands in two
ways: they can decrease formu-
lary coverage and/or increase the
patient’s co-pay. To measure the
impact of decreasing formulary
coverage, we can track the percent-
age of prescriptions presented to
pharmacists that insurers reject
due to lack of coverage. As Figure 5
on the next page illustrates, within
commercial plans, pharmacy rejec-
tion rates have soared from 12% in
2010 to 33% in 2015.
Similarly, we should be able to
quantify the impact of co-pay
increases by examining prescription abandonment at the pharmacy.
(See Figure 6.) Recently, average
co-pays in commercial plans for
newly launched products increased
by 20% from 2014 to 2015. So, one
would expect abandonment rates
to also increase. Yet, they’ve remained fairly stable from 2010 to
2015. Why? By triangulating this
information with insight into the
growing use of co-pay assistance
programs, we arrive at the probable answer: the industry’s efforts
to help patients with out-of-pocket
costs has offset the effect of the
co-pay increases imposed by insurers. The average final co-pay that
patients paid rose only 14% from
2014 to 2015, while co-pay offset
costs grew more than 32%.
Thus, launch teams are being hit by
a one-two punch. They are granting deeper rebates to payers and
paying out more in patient-support
programs.
UNINTENDED CONSEqUENCES
In this environment, prescriptions
written do not come close to equating to sales. Even for traditional
products which are not as expensive as specialty brands, prescription fill rates (total prescriptions
presented at the pharmacy, minus
those rejected and abandoned) are
decreasing. While the fill rate was
70% between 2010 and 2013, it
dropped to 55% between 2014 and
2015. That means that for every 100
prescriptions that make it to the
pharmacy, on average, only 55 get
filled.
To understand this in more detail,
we looked at fill rates for innovative
versus non-innovative brands. As
seen in Figure 7, the fill rate for innovative brands decreased by more
than 50% in the last two years. And,
it is far lower than the fill rate of
non-innovative brands. In 2014
and 2015, the fill rate during the
first six months of launch was 39%
for innovative brands and 57% for
non-innovative brands, suggesting
that payers are much more aggressive in limiting access to innovative
brands.
In many brand teams’ experience,
payers are delaying their reimbursement decisions on launch brands,
and so we compared fill rates for
the first six months post launch
with the second six months. While
the data show a slight increase in
fill rates in the second six months
for innovative brands, there may
be other factors at work aside from
payers’ reimbursement decisions.
It could be that manufacturers’
are contributing more to patients’
co-pays earlier on, a situation that
would mask payers’ delayed decision-making. We do know from
