How to overcome hurdles to implement value-based pricing
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The transition to value-based care is happening at a slower pace than policymakers and healthcare industry leaders had hoped. Stakeholders are struggling to negotiate and then operationalize these complex agreements.
The adoption of value-based drug pricing agreements is not widespread in the U.S., despite the stated strong interest from policymakers and the healthcare industry in tying the price of drugs to their benefit to patient outcomes and value to the health system. Outside of the government Medicare and Medicaid programs, the fee-for-service, volume-based payment model still accounted for almost 56% of commercial health payer contracts as of 2018.
Many value-based pharmaceutical arrangements are not disclosed publicly, making it difficult to know how many are implemented in the U.S. each year. According to the trade group Pharmaceutical Research and Manufacturers of America (PhRMA), there were 73 publicly disclosed value-based drug contracts at the end of 2019. A study published the same year in the American Journal of Managed Care (AJMC) suggested that, because of the confidentiality surrounding most agreements, analysts are underestimating the number of value-based pricing arrangements in effect and their impact on the U.S. pharmaceutical market.
In this article, we will highlight some concerns a payer and manufacturer considering a value-based drug pricing arrangement may each face, and give some insight into why these agreements aren't more widely accepted.
Payers modeling risk
A 2019 survey by the National Pharmaceutical Council (NPC) and the Duke-Margolis Center for Health policy showed that for payers, top deal-breakers in negotiations for value-based pricing arrangements were disagreements over incentive mechanisms for participation and financial terms. From the payer’s standpoint, a new, high-cost drug–especially one that addresses unmet needs or rare and orphan diseases–is worth the risk if it brings innovative, effective treatment for patients who may have no other options. But payers want to share that risk with the manufacturer when there’s the potential for a substantial impact on the payer’s budget.
Based on publicly available information, oncology, hematology, cardiology, and endocrinology drug treatments are common subjects of value-based pricing arrangements. These treatments have well-defined patient populations, easy-to-see impact measures, endpoints, and cures that make them more appealing to payers. It’s much more difficult to objectively measure the patient health outcomes for treatments covering pain management or mental health.
Payers also prefer treatments that show clinical results in a few months, not years. Tracking a patient’s health to confirm a drug’s value becomes more difficult when a drug takes years to show evidence of long-term benefits. For example, a longer-term benefit of treatment may be the avoidance of hospitalization. In the U.S., patients may leave a payer’s plan at any time, so this future cost may not be captured in the data collection under a current agreement.
Related Post: Value-based pricing vs best price? Medicaid's best price problem
Manufacturers sharing risk
When considering coverage of a new drug, payers might question the results of clinical trials, especially if there is limited real-world data because of an expedited FDA approval. So manufacturers must continue to create opportunities to generate real-world evidence that convinces payers of their drug’s value. And they must be ready and willing to share in the risk that a drug may not meet expectations in phase 4 confirmatory trials.
When a new drug has strong competition in the market, manufacturers need real-world evidence to differentiate their product and show their treatment brings better clinical outcomes and value than other options available. Value-based drug pricing agreements are an opportunity to fill that knowledge gap. Pharmaceutical companies not willing to do them to get that real-world evidence may lose out to those who are ready to take on innovative pharmaceutical agreements.
Contract partners building data-gathering and analytics capacity
In the 2019 NPC survey, manufacturers cited data collection challenges and disagreements on outcome measures among their top deal breakers.
Choosing the right contract model to fit the product and the capabilities of the contract partners is the first step. This means researching publicly available value-based drug pricing arrangements to learn the rewards and pitfalls of various contract models. All the contract partners must agree on the key metrics to be measured and how the data will be used to determine a drug’s value to patient health outcomes.
For the data-sharing component of value-based pricing arrangements, contract partners must develop a relationship that includes trust, cooperation, and an unusual level of transparency. Sometimes this relationship is best fostered and protected by the support services of a neutral third party, especially when one or both of the contract partners doesn’t have the technical capacity or administrative staff to operationalize a value-based drug pricing agreement.
The Lyfegen Solution
Value-based drug pricing arrangements are hard, but Lyfegen can make them easier. If your organization is considering a value-based pricing agreement, start by researching real-world examples of drug pricing arrangements in Lyfegen’s Models and Agreements Library. With a collection of more than 20 drug pricing models and over 1000 value-based agreements in use worldwide, the Lyfegen Library can help you discern what pricing arrangement is appropriate for your goals, your current operational capabilities, and your contract partners.
Lyfegen’s value-based contracting software can then operationalize the contract model you choose. We help healthcare insurances, pharma, and medtech companies implement and scale value-based drug pricing contracts with greater efficiency and transparency. The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable insights on drug performance and cost.
By enabling the shift away from volume-based, fee-for-service healthcare to value-based healthcare, Lyfegen increases access to healthcare treatments and their affordability.
To learn more about Lyfegen’s software solutions, contact us to book a demo.
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With the right tools, healthcare providers can collect real-world evidence about a drug’s value and benefit. How do we convince them to share the data through value-based purchasing arrangements?
In the U.S., lawmakers, payers, and the public are putting pressure on healthcare providers to help transform the healthcare system in the U.S. Despite resistance from healthcare providers to abandon traditional fee-for-service models, the U.S. healthcare industry continues trending towards the adoption of value-based payment models. This transformation includes the ambitious but necessary goals of producing better public health outcomes, decreasing health disparities, increasing affordability for patients, and decreasing the cost of healthcare overall.
At the heart of value-based pharmaceutical pricing is collecting the right data to measure and assess the benefit of a treatment. Real-world evidence is needed to determine a drug’s contribution to health outcomes. As workers on the front lines, healthcare providers are in an excellent position to collect data on a drug’s performance. With this information, decision-makers can arrive at a drug price that reflects its true value to patient health outcomes.
Patients are having trouble paying for their prescriptions
A 2019 Kaiser Family Foundation Health Tracking Poll revealed three out of ten patients surveyed—ages 50 to 64 years old—stated they had difficulty paying for their medications. Drug prices, price increases, and copays and deductibles are preventing some patients from starting, or continuing, the treatments they need.
In the U.S., hospital system clinicians and independent physician practices are expected to choose the best treatments for their patients without consideration of the patient’s insurance coverage status. Providers often have little to no idea of the costs their patients will bear without insurance, after insurance deductibles and copays are met, or after a drug maker’s patient assistance program intervenes.
A patient’s cost-related nonadherence may include not filling prescriptions, skipping doses, taking a lower dose than prescribed, and experimenting with non-prescription, over-the-counter treatments; these strategies affect patient health outcomes.
When patients are already struggling to cover prescription costs, they can’t afford to waste money on low-quality treatments that are ineffective or of little benefit to their health outcomes. Providers also don’t want to waste time with treatments that don’t produce better health outcomes. Therefore, most healthcare providers are open to exploring value-based pharmaceutical purchasing agreements that can allow access to newer, more effective treatments that patients can afford.
The benefits of value-based purchasing arrangements for healthcare providers and patients
Healthcare providers willing to enter value-based pharmaceutical purchasing arrangements are rewarded with many benefits, including:
• Improved quality of care and better health outcomes for patients
Providers in value-based purchasing arrangements gather real-world evidence of the effectiveness of a drug. They collect data that reveal which treatments are the most clinically effective and which add little or no value to patient health outcomes. This could lead to new insights into best practices and new clinical guidelines and protocols.
• Increased access to innovative, more effective treatments
Under value-based purchasing arrangements, providers and patients can gain access to brand new, high-cost prescription drugs. Real-world data gathered during contract implementation reveal the new drug’s benefit to health outcomes. Value-based purchasing can also encourage providers to try other lower-cost treatment options like biosimilars and new generics.
• Greater operational efficiency and reduced overall cost of healthcare
Identifying and eliminating low-value treatments through value-based arrangements reduces the waste of resources and time for both providers and patients. The provider’s clinical operations can become more efficient and cost-effective, with positive effects on revenue and patient satisfaction.
Healthcare providers have concerns about value-based purchasing arrangements
Despite the upside, providers are wary; value-based purchasing arrangements are complex. They require careful consideration of what metrics are to be measured. Stakeholder partners must navigate a new level of transparency and data sharing. And naturally, each partner in the agreement wants to include as many protective contingencies clauses as they can think of.
Providers want to be sure implementation of the agreement doesn’t become an untenable administrative burden for their staff. There are concerns about the technology upgrades needed to collect, protect, and analyze the data generated by value-based purchasing agreements. Will there be interoperability issues with the existing electronic medical records system? How will the data be interpreted and presented to provide actionable insights?
The safest and easiest way to overcome these barriers and get help to operationalize value-based purchasing agreements is to use a vendor partner with a customizable software solution.
The Lyfegen software solution
Lyfegen created a software solution that addresses these concerns about shifting from fee-for-service payment models to value-based purchasing arrangements. We help healthcare providers, insurances, pharma, and medtech companies implement and scale value-based contracts for specialty drugs with greater efficiency and transparency.
The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable insights on drug performance and cost in value-based contracts. In supporting the transition from volume-based to value-based purchasing arrangements, Lyfegen increases affordability and access to health treatments for patients.
To learn more about Lyfegen’s value-based contracting platform, book a demo.
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In June, the U.S. Federal Trade Commission (FTC) voted unanimously (5-0) to examine rising list prices of insulin, but also to probe possible anti-competitive practices by pharmacy benefit managers (PBMs) with respect to the use of rebate arrangements. Rebates are payments from drug manufacturers to PBMs in exchange for moving market share towards so-called preferred products on the formulary.
The FTC has specifically cited instances in which cheaper generics and biosimilars are excluded from PBM formularies, as this may violate competition and consumer protection laws.
The FTC inquiry into pharmacy benefit manager (PBM) practices could lead to legal action prohibiting certain rebate practices. In turn, this could induce major changes in the U.S. rebate system. Formulary management could become increasingly value- or outcomes-based, rather than simply a function of a financial power play between drug makers and PBMs. Or, rebates could fall by the wayside altogether, to be replaced by a combination of upfront discounts in lieu of rebates and value-based pricing arrangements. Partnering with Lyfegen may be the solution for manufacturers and payers alike, as its platform can put users on the right track towards successful implementation of value-based pricing arrangements.
The FTC has warned of legal action against PBMs if its inquiries find proof of anti-competitive practices. Here, the agency raised the stakes when it included terms like “commercial bribery” in its statements to describe what it perceives as anti-competitive rebates in the insulin market.
The latest FTC inquiries follow a recent investigation by Senators Grassley (R-Iowa) and Wyden (D-Oregon), which blamed rebate schemes for much of what ails the prescription drug market. Furthermore, nearly two years ago, Senator Klobuchar (D-Minnesota) and colleagues commissioned the General Accounting Office (GAO) to examine rebates. The GAO report is due out this fall.
PBMs receive rebates from drug manufacturers in exchange for preferred positioning on the formulary, which in turn drives market share. Experts have criticized rebates for the fact that payers often don’t base their decisions to include a drug on comparative clinical- and cost-effectiveness. Rather, decisions are strictly based on financial terms, namely which manufacturer offers a higher rebate payment to the PBM; a financial power play in which PBMs may threaten not to cover certain drugs if they don’t get the rebate they want. This applies to insulin as well as numerous other therapeutic categories.
What’s worse is when rebate traps or walls are involved. Branded manufacturers leverage their position as market leaders by offering financial incentives to PBMs and health insurers in the form of “all or nothing” conditional volume-based rebates, in exchange for (virtually) exclusive positioning on the formulary. This can mean keeping competitors off the formulary entirely, or severely limiting formulary access to a competing drug with drug utilization management tools like step edits. Here, a patient must use a preferred drug and fail on it (a so-called “fail-first” policy) before “stepping up” to a non-preferred drug.
Because the portion of the rebate retained by PBMs is often calculated as a percentage of a drug’s list price, PBMs can have incentives to establish formularies that favor branded drugs with higher list prices and larger rebates over lower priced biosimilars, specialty generics, or even branded competitors. Rival drugs entering the market lack sufficient sales volume to be able to offer the same level of rebates to PBMs that originator firms can provide.
Proof of the establishment of anti-competitive practices could lead to legal action being taken against PBMs. The question then becomes what would replace rebates? Payers may establish an entirely different formulary management system that is more value-based. Surely, it would be a system that’s less contingent on the role of the financial power play between drug makers and PBMs.
In areas such as immunotherapy targeting certain cancers, cell and gene therapy, and rheumatology, there are already a growing number of value-based agreements.
Girisha Fernando, CEO and Founder of Lyfegen, which offers a platform to track value-based agreements with real-world data, said that many outcomes-based deals are kept secret and therefore under the radar, so to speak. Commercial payers generally don’t share publicly what types of value-based deals they have with drug companies to maintain their competitive advantage. Yet, in an interview with Endpoints News Fernando stated that he’s observed at least a 300% increase in value-based agreements over the last five years. The Lyfegen Platform enables more efficient and transparent management of value-based drug pricing contracts by using intelligent algorithms to capture and analyze patient-level drug cost data.
Fallout from the FTC inquiry – should rebates be identified as anti-competitive - may entail further increases in value-based dealmaking.
About the author
Cohen is a health economist with more than 25 years of experience analyzing, publishing, and presenting on drug and diagnostic pricing and reimbursement, as well as healthcare policy reform initiatives. For 21 years, Cohen was an academic at Tufts University, the University of Pennsylvania, and the University of Amsterdam. Currently, and for the past five years, Cohen is an independent healthcare analyst n a variety of research, teaching, speaking, editing, and writing projects.
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CMS may want to consider value-based purchasing arrangements for Alzheimer’s Disease drugs
The Alzheimer’s Disease biologic Aduhelm (aducanumab) – a beta amyloid-directed monoclonal antibody - has experienced a tremendous amount of controversy regarding its safety and efficacy, both before and after its approval by the Food and Drug Administration (FDA) in June 2021.
A decision in April of this year by the Centers for Medicare and Medicaid Services (CMS) to place severe limitations on coverage of Aduhelm has all but killed the drug’s chances of success. And, even after Aduhelm’s original wholesale acquisition cost (WAC) of $56,000 was cut in half, there were very few takers in both the public and commercial payer spaces. Aduhelm’s “failure” to this point is partly to blame for the departure of Biogen’s CEO, Michel Vounatsos.
Could Biogen’s Aduhelm have been saved by a value-based purchasing agreement with CMS, in which Medicare Administrative Contractors and Medicare Advantage Plans only pay for Aduhelm if it provides clinical benefits to patients? Possibly. Moreover, and perhaps more importantly, such an arrangement could still be used for other beta amyloid-directed monoclonal antibodies that are currently in late stages of development and are less controversial than Aduhelm.
Under the final national coverage determination (NCD) issued in April by CMS, Medicare will severely restrict coverage of Aduhelm. Concretely, the decision implies that only Medicare beneficiaries who have enrolled in CMS-authorized randomized controlled clinical trials will get coverage of Aduhelm.
In addition, under the NCD, CMS states that, if approved by FDA, the entire class of beta amyloid-directed monoclonal antibodies will be subject to restricted reimbursement. For example, all accelerated approvals must undergo post-marketing clinical trials, analogous to the stringent requirements imposed on Aduhelm. And even beta amyloid-directed Alzheimer’s Disease drugs that go through the regular approval process must enter a coverage with evidence development protocol, which implies that post-approval collection of data in patient registries will be mandatory.
In its NCD decision, CMS did not mention a value-based purchasing agreement. Nor did it reference Aduhelm’s WAC. Given that CMS is not permitted to take cost or cost-effectiveness into account, it perhaps makes sense that Aduhelm’s WAC wasn’t mentioned.
Nevertheless, at a regional level, a value-based purchasing agreement is something Medicare Administrative Contractors and Medicare Advantage Plans could have pursued. In addition, nationally, the Center for Medicare and Medicaid Innovation has the authority to test models which modify Medicare payments for certain high-priced drugs. These models are designed to introduce a value-based approach for drugs that have been approved with limited evidence. Certainly, the class of beta amyloid-directed monoclonal antibodies fit this description.
Here, a linkage between pay and performance would need to be established, along with the proper timing of the measurement of cognitive decline in Alzheimer’s Disease patients. Performance measures could include the kinds of validated cognitive assessments outlined in the NCD.
Last year, the Institute for Clinical and Economic Review conducted a preliminary analysis of Aduhelm, extrapolating from Phase 3 data. ICER concluded that Aduhelm was not cost-effective, given the drug’s WAC, and that a cost-effective price benchmark range for would be between $3,000 and $8,400 per year for early-stage Alzheimer’s Disease patients, which is much lower than the current WAC of $28,000.
ICER’s assessment was not based on real world evidence, however. In any CMS-initiated value-based purchasing arrangement, there would be real world evidence, and accordingly adjustments could be made to the acceptable price range of the product. This could have applied to Aduhelm, but may still be relevant in future with respect to other beta amyloid-directed monoclonal antibodies, which are presently in Phase 3. These include Biogen/Eisai’s lecanemab, Roche’s donanemab, and Roche’s gantenerumab.
Aduhelm’s ship has perhaps sailed, with the baggage of the FDA approval controversy and the requirement of a randomized controlled clinical trial for any coverage at all. Nevertheless, value-based arrangements could very much be in play for other beta amyloid-directed monoclonal antibodies.
Undoubtedly this would be a major undertaking, particularly logistically. And, getting CMS to buy in won’t be easy. But, there’s precedent for CMS wanting to pursue value-based agreements. To illustrate, at the time of FDA’s approval of the CAR-T therapy Kymriah (tisagenlecleucel) in 2017 – indicated for acute lymphoblastic leukemia - it was accompanied by the announcement of a novel outcomes-based agreement with CMS, in which CMS would pay for Kymriah only if patients had responded to it by the end of the first month. Without disclosing why, CMS quietly backed away from that agreement.
Maybe the substantial unmet need in Alzheimer’s Disease will trigger CMS to consider alternative approaches to reimbursement. And, if any of the beta-amyloid directed monoclonal antibodies are approved in Europe or the U.K., similar value-based arrangements may be an option for payers.
Partnering with Lyfegen may be the solution for manufacturers and payers alike, as its platform can put users on the right track towards successful implementation of value-based purchasing agreements. The Lyfegen platform identifies and operationalizes value-based payment models in a cost-effective manner.
About the author
Cohen is a health economist with more than 25 years of experience analyzing, publishing, and presenting on drug and diagnostic pricing and reimbursement, as well as healthcare policy reform initiatives. For 21 years, Cohen was an academic at Tufts University, the University of Pennsylvania, and the University of Amsterdam. Currently, and for the past five years, Cohen is an independent healthcare analyst and consultant on a variety of research, teaching, speaking, editing, and writing projects.
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Pharma says they want greater competition within the industry and more incentives for pharmaceutical innovation; value-based purchasing agreements can provide both.
Value-based purchasing arrangements first appeared in the European markets in the 1990s, while U.S. healthcare markets did little with value-based contracts for pharmaceuticals until the 2000s. The high cost of new drugs coming to market, large annual increases in existing drug prices, and political pressure from lawmakers on payers to address the high cost of healthcare have encouraged stakeholders to make greater use of value-based purchasing arrangements.
It's easy to understand the appeal of value-based purchasing agreements for private and public payers. Value-based purchasing is one way both U.S. and European payers are using to reduce overall healthcare spending.
For drug companies, value-based purchasing puts an end to their unencumbered pricing strategy. But pharmaceutical manufacturers realize value-based purchasing agreements are the best way, and maybe the only way, to get their new, higher-priced products covered by payers and into the treatment plans of patients.
How do pharmaceutical companies determine their drug prices?
Pharmaceutical companies are in business to generate as much revenue as possible without jeopardizing patients’ access to their treatments. In the U.S., where drug pricing is unregulated, pharmaceutical manufacturers can charge any price they want for their products. In the EU, member states use regulations such as direct control over pricing, referencing the average price of a drug among all EU members to set a national price, or regulating the drug manufacturers’ profit.
When deciding on a new drug’s retail price, the manufacturer considers several areas of concern such as the drug’s competition, government-granted exclusivity, patents in force, and a drug’s clinical effectiveness and benefit to patient outcomes.
Pricing a drug incorrectly can have severe consequences for the manufacturer’s bottom line. Private and public payers in the U.S. have ways of restricting patients’ access to drugs that they consider overpriced. In European countries, drug manufacturers risk being fined by authorities for unfair prices and excessive price hikes.
Value-based purchasing promotes competition in the pharmaceutical market
In the U.S., there are economic policies and legal loopholes that manipulate competition in the drug industry. The Biden administration considers this one of the key problems to address to support drug pricing reform. The president’s Executive Order 14036, the Competition Executive Order, calls for increased transparency, innovation, and competition.
Even though manufacturers take advantage of U.S. government protections that create temporary monopolies for some drugs, the large industry trade group PhRMA has joined the call for reforms that fix the current distortions in the market that stifle competition.
Manufacturers producing new drugs with in-class competition from other manufacturers—such as generics, biosimilars, or new uses or combinations of older drugs—use the real-world evidence gathered from value-based purchasing agreements to demonstrate the greater clinical value of their treatments compared to their competitors’ products. Data that show a drug’s uniqueness and effectiveness may be used to justify a manufacturer’s higher-than-average price.
In addition, manufacturers hope aligning a drug’s price to its clinical value will shift payers’ focus away from approving treatments based solely on the lowest price to covering similar treatments that might be more expensive but produce better health outcomes for patients.
Value-based purchasing incentivizes research and development (R&D) of new drugs
The post-market clinical data gathered under value-based purchasing can facilitate data-driven drug development. For example, the drug company Novartis published a position paper in which they stated they use real-world evidence to support the development of customized interventions and to invest in research in areas of the highest value for patients.
In the U.S.market in recent years, the number of clinical trials and an overall increase in spending on brand-name prescription drugs suggest that pharmaceutical manufacturers have been concentrating their research and development dollars on new high-cost specialty drugs for complex, chronic, or rare conditions they expect will be the most profitable.
New treatments like these, where the drug’s value is yet to be established for payers, are good candidates for value-based purchasing arrangements. The successful implementation of value-based purchasing contracts—with better health outcomes for patients, cost controls for payers, and fair prices for manufacturers—encourages even more data-driven drug development.
The Lyfegen Platform
Value-based purchasing agreements are a complex but necessary part of doing business for pharmaceutical manufacturers. They provide a framework for assessing a drug’s value using shared outcome measures and provide real-world evidence of the benefits of their products for patient health outcomes. Manufacturers who are unwilling to enter into value-based purchasing contracts with payers may find themselves at a disadvantage in negotiations with other stakeholders.
Lyfegen’s software platform helps healthcare insurances, pharma, and medtech companies implement and scale value-based purchasing contracts with greater efficiency and transparency. The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable insights on drug performance and cost in value-based contracts. By enabling the shift away from volume-based and fee-for-service healthcare to value-based healthcare, Lyfegen increases access to healthcare treatments and their affordability.
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Basel, Switzerland –28, January 2025 - Lyfegen, a global innovator in drug market access, pricing, and rebate management, has announced a transformative collaboration with EVERSANA®, a leading provider of global commercial services to the life sciences industry, to revolutionize drug pricing and access through artificial intelligence-driven insights.
By combining data and information from the global pricing and market access platform, NAVLIN by EVERSANA®, with Lyfegen’s Public Drug Agreement Library, the two organizations will harness cutting-edge AI to empower market access and pricing professionals and payers with actionable insights. The joint agreement marks a key step in tackling rising drug costs and improving patient access globally.
Simplifying Complexity with AI
Drug pricing and access are increasingly difficult to navigate, with healthcare payers and pharmaceutical companies facing inefficiencies, missed opportunities, and delays in delivering therapies to patients.
The collaboration combines two leading platforms to address these challenges:
Together, these tools deliver a 360-degree view of pricing trends and access frameworks, enhanced by AI-driven capabilities. This integration helps users:
Driving Smarter and Fairer Decisions
Together, Lyfegen and EVERSANA will empower market access teams to make smarter, faster, and more equitable decisions. By combining AI-driven insights with robust data, payers and pharmaceutical companies can reduce inefficiencies and ensure patients receive timely access to life-saving therapies.
“Together with Lyfegen we can harness the power of AI to address one of the biggest challenges in healthcare—helping patients get timely access to life-saving medicines,” said Jim Lang, CEO, EVERSANA. “By uniting our expertise and our global pricing innovations, we have the opportunity to deliver a solution that simplifies decision-making and improves access in healthcare systems worldwide.”
A Vision for the Future of Drug Access
The healthcare industry is rapidly adopting AI to drive efficiency and innovation. This partnership positions Lyfegen and EVERSANA at the forefront of this transformation, enabling stakeholders to overcome affordability and access challenges.
“Our mission at Lyfegen has always been to create a more sustainable and equitable healthcare environment,” said Girisha Fernando, CEO of Lyfegen. “Through this partnership with EVERSANA, we are taking a giant step toward that future. By integrating EVERSANA’s price and access data into our combined offerings, we’re not just solving today’s challenges—we’re building a foundation for a smarter, more efficient drug access and pricing landscape.”
About Lyfegen
Lyfegen is an independent provider of rebate management software designed for the healthcare industry. With the world’s largest repository of drug access agreements and a powerful pricing simulator, Lyfegen helps payers and pharma implement and optimize rebates, reduce administrative effort, and understand financial impacts. Founded in 2018, Lyfegen is headquartered in Basel, Switzerland. Learn more at Lyfegen.com or connect with us on LinkedIn.
About EVERSANA
EVERSANA® is a leading independent provider of global services to the life sciences industry. The company’s integrated solutions are rooted in the patient experience and span all stages of the product life cycle to deliver long-term, sustainable value for patients, prescribers, channel partners and payers. The company serves more than 650 organizations, including innovative start-ups and established pharmaceutical companies, to advance life sciences solutions for a healthier world. To learn more about EVERSANA, visit eversana.com or connect through LinkedIn and X.
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Basel, Switzerland / Boston, USA – December 11, 2024
Lyfegen, a global leader in drug rebate management technology, today announced the successful close of its additional CHF 5 million Series A funding round. The round was led by TX Ventures, a leading European fintech investor, with additional participation from aMoon, a global health-tech venture capital firm, and other institutional investors. This funding represents a significant milestone for Lyfegen, enabling the company to accelerate its global expansion and innovation efforts, with a focus on extending its reach beyond Europe into new markets worldwide.
Addressing Rising Drug Costs with Intelligent Drug Pricing and Rebate Solutions
The healthcare industry faces increasing challenges with rising drug costs and the complexity of managing growing volumes of rebate agreements. For payers and pharmaceutical companies, manual processes often lead to inefficiencies, compliance risks, and operational delays. Lyfegen is transforming this process with its fully automated platform that ensures secure, real-time tracking, compliance, and operational efficiency at scale.
Today, 50+ leading healthcare organizations across 8 geographical markets rely on Lyfegen’s solutions to streamline 4'000+ rebate agreements while tracking over $1 billion in pharmaceutical revenue and managing over $0.5 billion in rebates annually. These solutions enable healthcare organizations to improve pricing strategies, accelerate access to modern treatments, and better manage rebate complexities.
Learn more about Retrospective Payment System
Scaling Globally with a Leading Rebate Management Platform
Already used by healthcare payers and pharmaceutical companies in Europe, North America, and the Middle East, Lyfegen’s rebate management platform is poised for broader global deployment. By automating rebate management, the platform enables healthcare organizations to simplify complex agreements, save time, reduce errors, and enhance financial performance.
“The market for innovative and personalized treatments is expanding rapidly, but with that comes increasingly complex and costly pricing models,” says Girisha Fernando, CEO of Lyfegen. “Lyfegen’s automated solution simplifies this complexity, helping payers and pharmaceutical companies unlock the full potential of rebates while improving patient access to modern treatments. With this funding and our new partners, we’re ideally positioned to accelerate our growth and make a meaningful impact globally.”
Jens Schleuniger, Partner at TX Ventures, adds: “Lyfegen is at the forefront of innovation, offering payers and pharmaceutical companies a powerful solution to address the rising complexities of pharma rebates. We’re proud to lead this funding round and support Lyfegen’s mission to bring greater efficiency and cost savings to healthcare systems worldwide.”
About Lyfegen
Lyfegen is an independent provider of rebate management software designed for the healthcare industry. Lyfegen solutions are used by health insurances, governments, hospital payers, and pharmaceutical companies around the globe to dramatically reduce the administrative burden of managing complex drug pricing agreements and to optimize rebates and get better value from those agreements. Lyfegen maintains the world’s largest digital repository of innovative drug pricing models and public agreements and offers access to a robust drug pricing simulator designed to dynamically simulate complex drug pricing scenarios to understand the full financial impact. Headquartered in Basel, Switzerland, the company was founded in 2018 and has a market presence in Europe, North America, and the Middle East. Learn more at Lyfegen.com.
About TX Ventures
TX Ventures is one of Europe’s emerging leaders in early-stage fintech investing. The venture capital fund invests predominantly in B2B Fintech across Europe - preferably in seed to series A stage.
For more information about Lyfegen’s solutions or to schedule an interview, please contact:
marketing@lyfegen.com
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In an industry often characterized by incremental changes, Girisha Fernando, the CEO and founder of Lyfegen, is making leaps. We sat down with Fernando to discuss the recent landmark partnership between Lyfegen and Newfoundland and Labrador Health Services—a collaboration that heralds a significant shift in the Canadian healthcare landscape.
Your partnership with Newfoundland and Labrador Health Services is quite a milestone. Can you share with us what this means for the current state of rebate management in Newfoundland?
Girisha Fernando (GF): Absolutely. This partnership is a transformative step for rebate management in Newfoundland. The current system, largely manual and complex, is ripe for innovation. With our digital platform, we're bringing a level of automation and accuracy that was previously unattainable. This means more efficient processing, less room for error, and a better allocation of resources, which is critical in healthcare.
That’s quite an advancement. And how does this impact the management of drug products, especially in areas like oncology?
GF: It’s a game-changer, especially for critical areas like oncology. Newfoundland and Labrador, as the first in Canada to use our platform, sets a precedent. The region, through the pan-Canadian Pharmaceutical Alliance, has been managing complex product listing agreements for drugs, including those for oncology. These agreements are vital for making treatments affordable. Our platform simplifies this, managing the various terms of these agreements efficiently, which is crucial for timely and affordable access to treatments.
It seems like a significant step forward for healthcare management. How does this align with the broader goals of Lyfegen?
GF: This partnership aligns perfectly with our goal to make healthcare more accessible and efficient. Automating the rebate process in Newfoundland and Labrador, especially for critical treatments in oncology, directly contributes to the sustainability and accessibility of healthcare treatments.
Looking to the future, what does this partnership mean for Lyfegen and healthcare systems globally?
GF: This is just the beginning. We're looking to extend our platform to healthcare systems around the world. Our aim is to make this technology a standard in healthcare management, fostering more efficient, sustainable, and equitable healthcare systems globally.
Read more about the partnership in the official press release.
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Basel, Switzerland, October 27, 2021
Lyfegen announces that Swiss health insurance Sympany is using the Lyfegen Platform to implement & execute complex drug pricing models. Sympany applies the Lyfegen Platform to execute and efficiently manage all value and data-driven pricing models. Sympany gains efficiency and transparency in managing pricing models with the Lyfegen Platform. It offers many pricing models, including pay-for-performance, combination therapy and indication-based models.
The Lyfegen Software Platform digitalises all pricing models and automates the management and execution of these agreements between health insurances and pharmaceutical companies. This is done using real-world data and machine learning enabled algorithms. With the Lyfegen Platform, Sympany is also creating the basis for sustainably handling the increasing number of value-based healthcare agreements for drugs and personalized Cell and Gene therapies. These new pricing models allow health insurances to better manage their financial risk by only paying for drugs and therapies that benefit patients.
"The Lyfegen Platform helps Sympany execute complex pricing models efficiently, securely and transparently. We are pleased to extend our pioneering role in the health insurance industry by working with Lyfegen. This is another step for Sympany to provide our customers with the best possible access to therapies in a sustainable way," says Nico Camuto, Head of Benefits at Sympany, about the use of the Lyfegen Platform.
Girisha Fernando, CEO of Lyfegen, says: "We are very proud to support Sympany in strengthening its focus on value creation, efficiency and transparency amidst the growing complexity of pricing models. It is clear that the trend is increasingly towards complex pay-for-performance arrangements. Ultimately, our goal is to help patients receive their much-needed treatments while helping health insurances better manage risk and cost."
The Lyfegen Platform aims to help patients access innovative medicines and treatments by enabling innovative drug pricing agreements. The Platform collects and analyzes real-time pricing data, allowing health insurances and pharmaceutical companies to obtain relevant information on drug benefits and related financial planning.
About Sympany
Sympany is the refreshingly different insurance company that offers tailored protection and unbureaucratic assistance. Sympany is active in the health and accident insurance business for private individuals and companies, as well as in the property and liability insurance business, and is headquartered in Basel. The group of companies under the umbrella of Sympany Holding AG comprises the insurance companies Vivao Sympany AG, Moove Sympany AG, Kolping Krankenkasse AG, and Sympany Versicherungen AG, as well as the service company Sympany Services AG.
In 2020, profit amounted to CHF 68.8 million, of which Sympany allocated CHF 27.5 million to the surplus fund for the benefit of its policyholders. Total premium volume amounted to CHF 1,058 million. With 575 employees, the company serves around 257,100 private customers, of which around 204,500 are basic insurance policyholders under the KVG. In the corporate customer business, Sympany offers loss of earnings and accident insurance.
More about Sympany: https://www.sympany.ch
About Lyfegen
Lyfegen is an independent, global software analytics company providing a value and outcome-based agreement platform for Health Insurances, Pharma, MedTech & Hospitals around the globe. The secure Lyfegen Platform identifies and operationalizes value-based payment models cost-effectively and at scale using a variety of real-world data and machine learning. With Lyfegen’s patent-pending platform, Health Insurances & Hospitals can implement and scale value-based healthcare, improving access to treatments, patient health outcomes and affordability.
Lyfegen is based in the USA & Switzerland and has been founded by individuals with decades of experience in healthcare, pharma & technology to enable the shift away from volume-based and fee-for-service healthcare to value-based healthcare.
Contact Press: press@lyfegen.com
Contact Investors: investors@lyfegen.com
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New York, NY - March 29, 2023 - Lyfegen, a global healthtech SaaS company driving the world’s transition from volume to value-based healthcare for high-cost drugs, announced at the World EPA Congress the launch of its latest solution: the Model & Agreement Library. The purpose of the library is to help payers and pharma negotiate better drug prices while providing an in-depth view on current international drug pricing models and value-based agreements. The database library serves as the basis for successful drug pricing negotiations, resulting in accelerated access and drug prices better aligned to their value for the patient.
The shift towards value-based healthcare, rather than volume-based, has been steadily increasing over the years. This evolution has further reinforced Lyfegen's mission to remain at the forefront of analytics and digital automated solutions for the healthcare sector. Indoing so, Lyfegen’s solutions help to accelerate access and increase affordability of healthcare treatments.
“Because of rising healthcare costs and the increase of medical innovations, the thirst for knowledge and need for value-based healthcare capabilities has surged among healthcare payers, and pharma companies across the world”, said Girisha Fernando, CEO of Lyfegen. “That is why we are so excited about launching the world’s largest database of real-world value-based agreements. It gives payers, and pharma a unique insight into how to structure value-based agreements.”
The Lyfegen Model & Agreement Library was developed as an accelerated negotiation resource for both manufacturers and payers – allowing them to save on time, money; and for the first time – an opportunity to learn at their own pace without incurring large research projects or hiring expensive external experts. Users of the library are now enabled to make informed decisions in determining the most suitable drug pricing models and agreements for their products.
The database holds over 2'500+ public value-based agreements and 18+ drug pricing models – spanning across 550 drugs,35 disease areas and 150 pharma companies. Its search capabilities are spread across product, country, drug manufacturer and payer – with all the knowledge, insights, current pricing and reimbursement activities shown in near real-timeacross the industry.
“Just an academic taxonomy of models is intellectually exciting but it's not really helping your typical customer”, said Jens Grüger, Director and Partner at Boston Consulting Group (BCG). “The Lyfegen Platform goes several steps further. Payers and pharma have a problem and they want a solution. The Lyfegen Model & Agreement Library is practical. It offers case examples.”
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The Model & Agreement Library lets the user see the specifics of agreements reached between manufacturers and payers, including which disease areas and drug/device innovations were targeted. This market-leading database allows for one-to-one comparisons of agreements while heightening increased leverage during the negotiations process.
“I like having a palette of contracts that fall under different domains, like disease state, the way the drug is administered, or available evidence. There are different ways to make a contract attractive to us, to pharma, and to our physicians”, said Chester Good, Senior Medical Director Center for Value Based Pharmacy Initiatives at UPMC Health Plan.
This resource represents a breakthrough in the healthcare industry that facilitates the sharing of knowledge – a strong point of discussion that is becoming increasingly more important. Lyfegen is currently providing a limited time opportunity for industry professionals who are interested to try out the Model & Agreement Library with a complimentary 7-day trial.
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Lyfegen is proud to announce that Professor Jens Grueger, PhD, has joined the company´s Advisory Board. Jens is the former Head of Global Access at F. Hoffmann-La Roche and has led country, regional, and global health economics and outcomes research, pricing, and market access organizations for SmithKline Beecham, Novartis, Pfizer and Roche.
He is a healthtech pioneer, founding his first digital disease management start-up in 1997, has been a long-time scientific reviewer for Value in Health and is the President Elect at ISPOR, the leading professional society for health economics and outcomes research. Throughout his various roles he has been promoting value-based pricing models across healthcare systems. Jens holds a PhD in Mathematical Statistics from the Technical University of Dortmund and is Affiliate Professor at the CHOICE Institute at University of Washington School of Pharmacy in Seattle, USA.
With his vast experience and expertise in healthcare, Jens will support Lyfegen to achieve its mission of facilitating and accelerating value-based healthcare to improve the life of patients.
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Lyfegen is excited to announce that co-founder Nico Mros is taking on a new role as Chief Customer Experience Officer (CXO). Until recently, Nico held the position of Chief Operating Officer (COO) of Lyfegen. Nico gives first-hand insights on what this shift means for him and Lyfegen.
The choice to transition into this new and exciting role is a logical one as Lyfegen continues to evolve and center all decisions and platform optimizations around the customers and patients needs.
With more than 8 years of experience in healthcare, Nico is a value-based healthcare leader with a strong skill set in project and change management. He is and stays responsible for customer experience and success at Lyfegen and leads the digitization projects for value-based agreements and real-world data insights of Lyfegen’s platform. This change helps to advance Lyfegen’s mission which is to create the most disruptive health tech company by driving the world’s transition to value-based and data-driven healthcare.
What does Nico have to say about his new title and the reasons for the change? We asked our new CXO to share his thoughts with us:
“At Lyfegen, we lived customer centricity since the beginning. This change in title comes natural and underlines for everyone what our existing customers tell us regularly – they feel understood, motivated and purpose-driven when working with us.” Nico says. “As a Co-Founder of Lyfegen I gladly accept this new title, letting go of my previous title as COO which, I honestly never liked. The choice to change this title feels obvious and necessary at the same time. I would say – just right. “
Furthermore Nico sees three main reasons for the renaming of the position which are:
1. The happiness of the customers at Lyfegen is of utmost importance, it is even a key factor for success at Lyfegen. Hence, Lyfegen wants to establish a point of view that focuses unconditionally on customer happiness, allowing to establish trusted and long-lasting relationships with clear point of contacts.
2. Besides acting directly with the customers, a customer-first environment within Lyfegen is crucial. Embedding the customer perspective in every decision, beginning with product design and ending with company strategy, allows Lyfegen to be the customer-centered company we want to be.
3. Keep it simple and understandable. While a COO can have many focuses, the Customer Experience Officer has just ONE: the customer's best possible experience and success.
Further Nico adds: “It is my firm belief that helping customers to gain success and delivering superior experience in every point of contact can be a major competitive advantage, even a unique selling point. As CXO I can guarantee this kind of philosophy from the product to personal interactions. In combination with innovative technology, this is the key to sustainable success.”
Are you ready to become a happy customer?
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Our CEO, Girisha Fernando, gives first-hand insights to what it means to be a “Mindful Leader” and how the COVID19 pandemic has impacted his leadership style.
Admit it, you clicked on this blogpost because the question itself raises endless questions. What is mindful leadership? Is it really possible to be a mindful leader in a high-paced (stressful and sleepless) startup environment? Now add the physiological stress of a pandemic to the equation.
Recently I came across one of the live lectures of Simon Sinek (if you don’t know him: google him), focusing on the topic of “mindful meditation for focused leadership”. I was pleasantly surprised to see that mindfulness and mindful leadership is gaining well-deserved attention in the workplace. Before I dive into how I live by this leadership style at Lyfegen, let’s quickly dive into what it means:
What is Mindful Leadership (without writing a Wikipedia essay)?
Mindful leadership is leading while being aware in the present, focusing (in our case) on the road to success rather than success itself, all while interacting humbly within the team and with customers.
When confronted with challenges, a mindful leader will focus on action rather than control, remaining as agile and calm as possible. After all, you cannot always control the output but can influence how the team gets to it.
Example: It unexpectedly starts raining. A controlling leader will focus on the unforeseen rain and how the team failed to get sunshine (despite it not having necessarily been in their power), micromanaging every consequent step.
A mindful leader will stay calm, gearing up on raincoats & boots for his team, enabling and helping them to adapt their strategy in order to reach sunshine.
While this is a rather simplistic way of looking at mindful leadership, you get the overall idea and how this encourages a high confidence, creative, agile, and cooperative environment.
Mindful Leadership at Lyfegen
I am by no means an expert in mindful leadership and have made my share of mistakes. My Buddhist family background has taught me a lot about mindfulness, incorporating meditation into my daily routine.
However, one would think that practicing mindful leadership is harder in a high-paced start-up environment. I disagree: it is exactly in such an environment that, despite the 14+ hour workdays, one needs to stay present. Focus on the now and continuously fine-tune how to “reach the sunshine”, learning from mistakes on the way.
When the COVID-19 pandemic hit Switzerland hard in March, our team was faced with various challenges in terms of business and speed of implementation. However, team-work was not one of them and for that I greatly attribute this leadership style.
We took everyday as it came and continued, even digitally, to work together like an orchestra in perfect harmony. When comparing to the analogy above, COVID-19 was a true thunderstorm and at the same time, it gave light to a rainbow of opportunities.
My 5 key takeaways for becoming a more mindful leader:
- Focus on the now: optimize how your team works together. The goal will follow as a direct result.
- Focus on the essential: if everything is a priority then nothing is a priority. As a leader, make sure everyone is working towards the same milestones along the road rather than mainly focusing on the goal.
- Always remain humble: treat others the way you expect them to treat you (unfortunately a lot of people in other companies know this but don’t live by it).
- Never be afraid to fail. Let go of fear to unlock maximum potential.
- Always take a moment, as a leader, for self-reflection & calm. At Lyfegen, we have a little room in our office with some bean-bags where anyone can retreat and meditate during the day. If you don’t find me at my desk, this is where you’ll find me.
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To build the best software ever, you also need the best team ever. We are meticulous in our selection and delighted to announce that we have found a gem for our junior quality engineer position: Alina Bratu has joined Lyfegen to improve the quality and user experience of our platform. We sat down with Alina to learn about her experience, her goals, and her aspirations.
Hello Alina, and welcome to Lyfegen! Please tell us a little about yourself: Where are you from, and what’s your educational and professional background?
Hi! I grew up in the city of Buzau in Romania and currently live in Bucharest. In college, I studied public administration and later decided to pursue a career in analytics. With the recommendation of friends, I decided to move towards software testing – which is the best decision I’ve made!
What excites you about being a junior quality engineer?
I like to view software testing as the work of a detective who follows clues that eventually help them to solve a case. It is a challenging and ever-changing line of work, and the best thing about it is that it truly impacts the delivery of quality products in a tech-driven world.
Why did you decide to join Lyfegen?
The company’s mission to make healthcare more accessible resonated with me, and I was really excited about the opportunity to work on a project that has the potential to impact the world. Working in a start-up environment with such a motivated and talented team is an amazing chance for me as a junior QA to develop my career while applying the knowledge I gained in the past year to something new and meaningful.
What do you want to learn or improve on this year?
My main goal this year is to learn more about the healthcare industry while also expanding my QA knowledge and expertise.
How will your know-how help to improve our customers’ experience of the Lyfegen platform?
As a QA engineer, I am responsible for tracking down any defects that might affect the users’ interaction with the platform. As I enjoy doing this ‘detective work’ and challenging the software in different ways, together with the developers, I can ensure that the user experience will be pleasant and the platform will look and act accordingly.
Let’s get personal: What are your favorite things to do in your free time?
In my free time, I enjoy reading fiction and self-development books and traveling as these activities help me to gain a new perspective and relax. When I’m not engaging in these hobbies, I enjoy cooking, watching movies, and playing board games with my friends.
Is there anything else you’re looking forward to outside of work this year?
I want to achieve balance and start enjoying and practicing my hobbies more. I am also planning to dust off my driving skills as I’ve postponed this for quite some time!
We are super happy to have you with us, Alina!
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Nico Mros, Lyfegen’s COO, explains why Lyfegen is a firm believer in the UN Sustainable Development Goals and how the company works towards Goal # 3: Good Health & Well Being.
Chances are that since the pandemic hit, you have at least heard of the UN Sustainable Development Goals. But what do these mean and how does a company like Lyfegen incorporate these in their business?
The Basics
The 17 goals were set in 2015 by the United Nations General Assembly with the intention of reaching these by 2030. The interlinked goals are a “blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including poverty, inequality, climate change, environmental degradation, peace and justice.” Each of the 17 goals outlines even more specific targets, which are constantly monitored and discussed between countries.
Lyfegen & Sustainable Development Goal #3: Good Health & Well being
Ensuring healthy lives for all and promoting well being is an essential goal, even more so since the pandemic affected millions worldwide. That said, this goal aims at improving the health of millions of people, increasing their life expectancy and reducing child and maternal mortality. In addition, it addresses persistent and emerging health issues, focusing on providing more efficient funding of health systems. This in turn, enabling millions of people worldwide to have more widespread access to the medication they need.
Specifically, Sustainable Development Goal #3 outlines the following target:
“3.8 Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all.”
Sounds familiar? Lyfegen’s mission is to help patients to access innovative therapies by driving value-based healthcare. In other words: Doing what’s right for patients!
The pay-for-performance model, which Lyfegen enables through their value-based contracting platform, allows for more people worldwide to have access to innovative and often expensive medication. This directly addressing the UN’s goal to “provide more efficient funding of health systems” and have more “widespread access to medication”.
With some of the leading manufacturers, payers, and care providers already using Lyfegen’s solutions, a clear step towards supporting the UN Sustainable Development Goals is taken. We are proud to be a part of this journey towards a better future!
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Insulin is going through monumental shifts in pricing and reimbursement in the U.S. It started with the announcement of reductions in list prices by drug companies last year. First, Novo Nordisk announced plans to reduce the list prices of several of its insulin products beginning January 1, 2024. This included lowering the price of NovoLog and Levemir by at least 65%. This move was followed by a similar commitment by competitor Eli Lilly to reduce Humalog’s price, among others, and came just days before Sanofi’s announcement to decrease Lantus’s price.
Moreover, biosimilar competition is ramping up, particularly in the long-acting insulin glargine space. Rezvoglar and Basaglar are leading the way, as they gain traction on payer formularies, especially in the public Medicaid market.
And this year, owing to implementation of the Inflation Reduction Act, the Centers for Medicare and Medicaid Services began negotiating the net prices of both NovoLog and Fiasp, with public disclosure of said prices due to be revealed by September. Payers will soon be able to use these net prices as benchmarks to leverage better deals in markets besides Medicare. Also, CMS capped monthly out-of-pocket costs of insulin products for Medicare beneficiaries at $35.
For their large populations of insulin-dependent diabetics, payers will need to implement value-based coverage decisions that provide for the most optimal solutions for health plans and employers but also the lowest out-of-pocket costs for patients.
Because both list and net prices have come down, payers will likely lose out on some portion of the rebates—which reflect the difference between gross and net price—that they had grown accustomed to getting in the past. At the same time, the increasing number of payers that are adopting a rebate-free, net cost approach to formulary design will benefit from lower net prices.
And cheaper treatment options for patients may translate into better adherence to drug regimens which in turn could lead to improved health outcomes. For payers with a long-term perspective and comparatively little churn or enrollee turnover the potential downstream cost savings could be beneficial.
Lyfegen can assist in the calculations of value for all insulin products, both short- and long-acting, in addition to the design of appropriate formularies.
If you wish to improve your negotiating leverage for insulin products you can do so with real-world simulations for effective prescription drug contracts. Discover the Lyfegen Drug Contracting Simulator, our intuitive solution for streamlining iterative, collaborative drug contracting design.
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The next wave of biosimilars, including Humira-, Eylea-, and Stelara-referenced products, is upon us.
In the U.S., 10 Humira-referenced biosimilars are on the market, nine of which launched in 2023. Until now the biosimilars have gained minimal traction. But that is changing, as the number of new prescriptions written for biosimilar versions of Humira soared to 36% from just 5% during the first week of April, after CVS Caremark altered its formulary.
CVS Caremark—the largest pharmacy benefit manager in the U.S.— removed Humira from its national commercial “template” lists of reimbursable drugs starting April 1. In its place, the PBM included the Humira-referenced biosimilars Hyrimoz, Hadlima and adalimumab-fkjp (a Biocon-produced unbranded product). Hyrimoz appears to be the most favored biosimilar. Similar moves have been signaled by the PBM Express Scripts and its parent company Cigna to be enacted this month, but this time Simlandi will be the most preferred biosimilar.
The FDA also recently approved two interchangeable biosimilars to Eylea, which will produce additional competition for the pharma’s blockbuster as key patent protections are set to expire.
And the biologic Stelara, which was selected as one of the first 10 drugs for Medicare price negotiations, will have its net price disclosed in September of this year in addition to facing biosimilar competition in 2025. The downward pressure on Stelara's price, but also Stelara-referenced biosimilars, will likely be significant.
For their large populations of covered lives who take products in the Humira, Eylea and Stelara-related therapeutic classes, payers will need to implement value-based coverage decisions that provide for the most optimal solutions for health plans and employers but also the lowest out-of-pocket costs for patients.
Improved access to biosimilars will offer patients expanded, less costly treatment options. For uptake to happen, payers must educate healthcare providers and patients on the value of biosimilars so that they are on board, whether they are designated by the Food and Drug Administration as therapeutically interchangeable or not.
Hyrimoz and Simlandi are therapeutically interchangeable and favored due to the formulary moves by CVS Caremark and Express Scripts, respectively.
The therapeutic interchangeability designation still plays a role in the U.S., because for biosimilars to be automatically substitutable at the pharmacy they must have proven interchangeability in addition to biosimilarity. As a result, physicians have expressed a preference for biosimilars that have the designation.
But for the many biosimilars that don’t have the therapeutic interchangeability designation, to boost their adoption manufacturers and payers must overcome this de facto regulatory barrier by informing healthcare providers and patients that proof of biosimilarity is sufficient.
Lyfegen can assist in the design of formularies tailored to clients' objectives. It can also accommodate information requests concerning which value-based arrangements are the most appropriate, given the scope of its library database as well as other client services.
If you wish to improve your negotiating leverage you can do so with real-world simulations for effective prescription drug contracts.
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Vertex Pharmaceuticals may soon obtain Food and Drug Administration approval for a non-opioid analgesic, dubbed VX-548, for moderate to severe pain. But will insurers pay, given that there are so many cheap generic prescription opioids and other pain medicines on the market?
Presumably, the new non-opioid pain medication will be substantially more expensive per unit than generic opioids. Given the large numbers of patients needing pain drugs, for post-surgery, for instance, payers will need to manage the cost.
Prescription opioid medications remain a common treatment for pain despite decreases in the total number of opioid prescriptions after 2012. They’re cheap but also effective.
Should VX-548 obtain FDA approval, payers might be reluctant to cover the drug without clear and consistent evidence that the drug works as well or better than prescription opioids. Recent examples of non-opioid analgesics, including Exparel (bupivacaine) and Zynrelef (bupivacaine/meloxicam), demonstrate the kinds of reimbursement challenges drug makers may face, particularly early following their approval by the FDA.
Nevertheless, prescription opioids can be misused, abused, and diverted. In this regard, the non-opioid medicines Exparel, Zynrelef and, if approved, VX-548, do meet an important unmet need. However, not every patient will require access to more expensive medications. And so, it will be imperative to differentiate patient sub-populations by risk factors, in addition to comparing the clinical- and cost-effectiveness of non-opioid treatments to prescription opioids.
Lyfegen can assist in the calculations of value for both prescription opioid and non-opioid analgesics, in addition to the design of appropriate formularies.
Managing pain, whether acute or chronic, invariably involves a balancing act in which doctors, patients and insurers must consider appropriate forms of treatment. Proper patient stratification includes an assessment of the benefits and risks of both opioid and non-opioid medications to individual patients.
Lyfegen can navigate the different ways in which payers and drug makers negotiate contracts for pain medications. In the Lyfegen Library you can find the right model to use as a benchmark during pricing and reimbursement negotiations, which in turn will increase the chances of success. To explore strategies that enhance your ability to negotiate and implement successful pricing and reimbursement agreements for pain medications, visit the Lyfegen Library at lyfegen.com/library.
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While the recent wave of new obesity drugs appeals to many patients due to their effectiveness in reducing weight and even diminishing the risk of major cardiovascular events for some, data suggests that at current prices they’re not cost-effective. Amid increased concern about the costs of using therapeutics such as glucagon-like peptide 1 agonists, some U.S. insurers are imposing further restrictions or eliminating coverage of the drugs altogether.
To boost access, a recent Financial Times article discussed the possibility of introducing value-based pricing arrangements for weight loss drugs. Under such “risk-based contracts,” healthcare providers could spread the cost over a period of time during which savings are possible, for example, from not having to treat as many heart attacks. Alternatively, drug makers and payers may negotiate value-based contracts which include patient persistency as a prerequisite. Persistency is known to be an issue with obesity drugs, as many patients stop taking the medications owing to side effects and other issues. If patients discontinue treatment weight rebound occurs, which implies that payers and patients must be properly incentivized to be persistent.
To effectively implement value-based agreements requires reliable cost of care analytics, modeling capabilities and outcomes-based agreement templates, which Lyfegen can provide stakeholders to calculate and forecast return on investment for use in the contracting process.
Value-based arrangements could ease the projected financial burden for commercial insurers, but also public payers such as Medicaid and Medicare. At present, most Medicaid state agencies don’t reimburse obesity therapeutics, while Medicare still prohibits their coverage if prescribed as weight loss medications alone. The drug Wegovy (semaglutide) did secure a supplemental cardiovascular indication from the Food and Drug Administration in March. This allows limited access for certain Medicare beneficiaries who fulfill weight and major cardiovascular risk criteria. But it doesn’t follow that plans will necessarily jump to pay for the product, given the high cost and limited cost-effectiveness. Introducing pay-for-performance agreements could facilitate access.
Lyfegen can accommodate information requests concerning relevant measures. The Lyfegen Library specifically offers access to one central resource with more than 4,500 public agreements and 20 innovative pricing models. For a deeper understanding of how value-based pricing models can transform the accessibility of obesity treatments and optimize your healthcare investments, book a demo with us.
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As more biosimilars get approved and launched in the U.S., payers are making key decisions about their coverage and formulary positioning. Recently, this includes Humira-, Stelara- and Remicade-referenced products.
Historically, in the U.S., biosimilars have often failed to gain much traction owing to a Byzantine system of pricing and reimbursement which involves opaque rebate schemes. Here, higher list-priced drugs often carry with them higher rebates, which can mean that pharmacy benefit managers may favor originator products such as Humira.
As an illustration of this, according to a federal government Medicare Payment Advisory Commission report, more than 40% of Medicare beneficiaries still have no access through their insurance to Humira-referenced biosimilars, despite several products having discounts of over 80% compared to the original Humira.
But novel approaches to pricing and reimbursement could change formulary decision-making significantly, establishing the basis for more use of outcomes-based decisions. CostVantage, for example, is a new cost-based pharmacy reimbursement approach that all PBMs will eventually be required to use if they contract with CVS retail pharmacies, the largest pharmacy in the nation.
The CostVantage model stipulates that prescription drug reimbursement will be based on net acquisition cost, a set mark-up and a fee that reflects the value of pharmacy services. CVS Pharmacy plans to launch CVS CostVantage with PBMs for their commercial payers in 2025.
Such net-cost reimbursement systems tend to stimulate the uptake of lower cost (and more cost-effective) biosimilars. We find evidence of this in Europe where cost-effective biosimilars generally have fairly rapid entry which then quickly displaces the market share of originator products. By the last quarter of 2019, within one year of Humira-referenced biosimilar entry into the European market, an average of 35% of patients across Europe had already switched to a biosimilar; in the U.K, the figure was 63% which was achieved just six months after biosimilars were allowed to compete; in Denmark, with its winner-takes-all tender, the number was 80% and was attained within three months of being on the market. Meanwhile, in the U.S., after 15 months of being on the market, Humira-referenced biosimilars have only achieved 2% market share.
The new net-cost model of reimbursement in the U.S. will likely lead to greater adoption of biosimilars, at least in the large CVS segment of the market. Lyfegen can navigate the different ways in which payers and drug makers are negotiating contracts for biosimilars. In addition, Lyfegen can help address the concerns payers may have about high-priced specialty drugs, such as originator biologics and biosimilars. In the Lyfegen Agreements Library you can find the right model to use as a reference during pricing and reimbursement negotiations, which in turn will increase the chances of success.
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