What You Should Know:
– As the world prepares for the Inflation Reduction Act’s landmark policy changes, healthcare stakeholders realize that its wide-ranging effects will require new approaches to drug pricing, health plan design, and investment.
– Avalere’s ‘2023 Healthcare Industry Outlook’ examines how community-wide healthcare will be affected by a recent court ruling, and consider data’s role in addressing health disparities.
Key Trends in Healthcare in 2023
The main insights from the report are highlighted as follows:
1. Understanding the Interaction Among New Drug Pricing Policies
Drug pricing policy changes will have far-reaching effects for all stakeholders, varying based on product-specific payer mix, channel mix, and market dynamics. For example, Medicare negotiation and increased management of physician- administered drugs could meaningfully impact ASP, changing physician reimbursement, prescribing, and access. Evaluating the policies’ individual effects and their interactions will improve the development of new pricing and contracting strategies.
2. Organizing for Medicare Part D Redesign
Part D benefit redesign will add pressure to plans and manufacturers, while increasing affordability for beneficiaries. Manufacturers can expect Part D volume and revenue changes and should prepare for new plan approaches to formulary and benefit design. Plans developing 2024 bids will consider their increased liability and the effects of lower patient out-of-pocket costs on medication use and adherence, with an eye to enrollment in future years, given historical data that beneficiaries are unlikely to switch plans once enrolled.
3. Anticipating the Effects of Vaccine Coverage Changes
The IRA requires coverage of recommended adult vaccines with no cost sharing in Part D starting January 1 and for state Medicaid plans starting October 1. This ensures no-cost access for almost 75M adults in those programs and aligns coverage with requirements for Medicaid expansion populations and enrollees in most commercial health plans. As affected payers adapt their coverage policies and anticipate increased uptake, provider reimbursement rates remain unchanged, potentially creating a barrier to stocking and administering vaccines.
4. Engaging in Policy Advocacy on IRA Rules and Congressional Priorities
The IRA’s legislative language lacks important operational details that will affect the Medicare market. Over the course of 2023, CMS will release guidance that will shape the implementation of Part D redesign and Medicare negotiation policies in the IRA. Stakeholders can best influence these policies before drafts are published. Therefore, anticipating when CMS will make these decisions is critical for those seeking to shape implementation and prepare for their impact.
5. Preparing for the Impact of Part D Risk Adjustment
Part D redesign shifts liability from the government to health plans through changes to reinsurance programs and to direct subsidies that are adjusted based on health status and other demographic factors. Thus, the accuracy of the risk-adjustment model will be even more influential in determining if plan payments will reflect actual enrolees costs, especially for those with high drug spending.
6. Considering IRA’s influence on Healthcare Investment: Manufacturers may evaluate the need to adapt their pipeline strategies to incorporate the IRA’s new pressures and incentives into planning across the product lifecycle. Scenario analyses will inform early-stage portfolio decisions, such as therapeutic area targets, formulation and route of administration, Part B vs. D considerations, and phasing of indications in specific patient populations. Factoring policy and access change in early clinical development may allow manufacturers to optimize a product’s value potential and improve targeted R&D investment.
