In a year marked by landmark legislative changes in support of value-based drug pricing, Medicare has recently received authorization to negotiate directly with drug manufacturers under the health provisions of the Inflation Reduction Act of 2022. Proponents of the law are hoping value-based pricing negotiations and inflation-based rate hike rebates for the country’s largest public healthcare payers will lower national drug costs and save U.S. taxpayers hundreds of billions over the next decade. Of course, pharmaceutical companies disagree.

In 2022, the pharmaceutical industry spent $187 million in lobbying funds fighting–unsuccessfully–to stop passage of a law that would grant Medicare negotiating authority for drug prices. The Inflation Reduction Act (IRA) of 2022 brought to life a legislative fix patient advocates, physician groups, and Democratic legislators have been trying to enact for decades as a tool to help lower prescription drug costs.

When the Medicare Part D retail prescription drug program was created in 2003, Republican legislators added the “noninterference clause” to the law to prevent Medicare from negotiating drug prices. Private health plans run the Medicare Part D drug program, but they set formularies and conduct drug price negotiations without Medicare’s input. The IRA establishes Medicare’s voice in drug price negotiations with drug manufacturers under the Drug Price Negotiation Program set to begin in 2023.

Medicare will be authorized to negotiate directly with manufacturers to find Maximum Fair Prices (MFPs) for a limited number of drugs that have no generic or biosimilar competition. The law also limits price increases year-over-year for Medicare Part D and Part B units sold (not for commercial units sold). Outside of a few product exceptions, drug makers who increase their prices more than the rate of inflation will have to pay rebates to Medicare.

Which drug prices can Medicare negotiate?

According to the new law, each year the Secretary of the Department of Health and Human Services (HHS) will select from a list of qualified single-source drugs with the highest total Medicare spending. The list of negotiation-eligible drugs will consist of the 50 costliest drugs from Medicare’s Part D program and (after 2028) the 50 costliest drugs from Medicare Part B (for drugs physician-administered on an outpatient basis).

A timeline for the changes enacted by the new legislation gives pharmaceutical manufacturers and health insurers time to adjust. The first step of the Drug Price Negotiation Program gives Medicare the authority to negotiate the 10 most expensive Part D drugs, with the negotiated price starting in 2026. The program expands to 15 eligible Part D drugs by 2027. Beginning in 2028, some Part B drugs may also be included in the list of 15 products that can be negotiated. From 2029 forward, Medicare can negotiate pricing for up to 20 Part D and Part B drugs. In total, Medicare will be able to negotiate prices on up to 60 eligible drugs by 2029.

The drugs for price negotiations under the IRA must meet certain standards, including the following:

·      The drug may not have a generic substitute.

·      For small-molecule drugs, it must be at least 7 years since FDA approval was granted.

·      For biologics, it must be at least 11 years since FDA approval was granted.

·      New drug formulations or treatments for rare diseases are excluded.

·      Treatments extracted or developed from human blood or plasma are not eligible for price negotiations.

·      A drug is excluded if Medicare’s total expenditures for the drug are no more than 1% of total Part D expenditures.

·      Most drugs developed by small biotechnology companies are excluded.

Not surprisingly, pharmaceutical companies see the passage of the IRA as an unfavorable development and view the Medicare negotiation process as price setting, not negotiations. The HHS and manufacturers are required to negotiate and agree on MFPs for negotiation-eligible drugs; negotiations are not optional. The drug manufacturer has 30 days to accept or counter the price offer Medicare makes. If a manufacturer refuses to cooperate with HHS or fails to negotiate in good faith, HHS can impose civil monetary penalties and an excise tax for non-compliance. It’s likely the pharma industry will challenge the law in court.

What analysts predict about industry impact and cost savings

In July 2022, the Congressional Budget Office (CBO) published the latest estimate of the budgetary effects of the health provisions in the IRA. The CBO expects Medicare’s ability to negotiate drug prices will save $102 billion in public sector healthcare costs over 10 years. During the same period, the CBO estimates an additional $62 billion in savings will result from the cap on drug price hikes at the rate of inflation.

The CBO expects manufacturers will increase launch prices for their new products to counteract the IRA’s inflation-rebate provision which slows the growth of prices over time. The analysts predict this will lead to an increase in Medicaid spending because Medicaid’s rebate program, triggered by the higher launch prices, would not fully offset the price increases. The CBO says Medicare Part B may also be affected by higher launch prices since that program uses the market’s average sales price of a drug to determine its reimbursement rate.

Analysts from Moody’s Investors Service expect there will be both price reductions for some drugs and limited price growth for other drugs. Moody’s analysts warn manufacturers that show high Medicare spending–due to their high prices, not patient consumption–will feel the impact of these regulatory changes the most.

Using the data from value-based drug purchasing arrangements

Proponents of Medicare’s authorization to negotiate drug prices believe the prescription drug provisions in the IRA are a suitable compromise that allows drug manufacturers to realize a reasonable profit while increasing the health benefits, accessibility, and affordability of prescription drugs for Medicare patients. Value-based purchasing arrangements will be an important tool at the core of this compromise.

Part of the criteria the HHS Secretary will consider when negotiating an MFP is the drug’s value to health outcomes and its cost-effectiveness compared with alternative treatments. Industry experts recognize that one of the best ways to gather insights into a drug’s performance is from the data collected in the implementation of value-based drug agreements. The data can either provide real-world evidence of a drug’s cost-effectiveness and benefit to patient health outcomes or reinforce the terms of a rebate for a drug’s underperformance.

Since negotiation-eligible drugs include those approved by the FDA at least 7 years ago, performance data may already be available from past value-based drug agreements for the first round of Medicare price negotiations. Manufacturers can prepare for future negotiations with Medicare by seeking value-based purchasing arrangements for their newer products as soon as possible after FDA approval.

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The Lyfegen solution

Lyfegen, an independent global software analytics company, offers a contracting platform solution that helps health insurances, pharma, medtech, and hospitals implement value-based payment models with efficiency and transparency. Lyfegen’s Platform performs real-time, end-to-end, data collection and analysis through intelligent algorithms that can operationalize any value-based pharmaceutical purchasing arrangement and provide deep insights into a drug’s performance.

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.

To learn more about our services and the Lyfegen Platform.

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BOOK A DEMO

With passage of the Inflation Reduction Act, the Medicare Part D (outpatient drug benefit) will be undergoing a comprehensive redesign, which will be implemented in 2025. There will be a dramatic shift towards payer responsibility of costs, particularly in the catastrophic phase of the Medicare Part D benefit.

Currently, during the calendar year there are four phases a Medicare beneficiary goes through when obtaining coverage of outpatient drugs: Deductible, initial coverage, coverage gap, and catastrophic. Here, catastrophic refers to the point when a beneficiary’s total prescription drug costs for a calendar year have reached a set maximum level. At present, the catastrophic threshold is set at $7,100. In a given year, once beneficiaries hit the threshold they will have spent $3,250 out of pocket, at which point they begin paying 5% co-insurance in the catastrophic phase.

Over a five-year period from 2016 to 2021, nearly three million enrollees in Medicare Part D spent above the catastrophic threshold at least once. And, currently more than 1.5 million beneficiaries are in the catastrophic phase. That number is expected to grow steadily in the coming years. Moreover, at present, spending in the catastrophic phase now accounts for about 45% of total Medicare Part D expenditures.

The redesigned Medicare Part D benefit features a $2,000 hard cap on beneficiary out-of-pocket spending. At the same time, there will be a massive shift in cost management liability in the catastrophic phase. Currently, Medicare picks up the tab for 80% of costs in the catastrophic phase (the government is essentially the reinsurer in the catastrophic phase); plans, 15%; and beneficiaries, 5%. In the restructured Part D benefit, starting in 2025, the drug manufacturer will be responsible for 20% of catastrophic costs; plans, 60%; Medicare, 20%; and Medicare beneficiaries, 0%.

This $2,000 cap will obviously reduce Medicare beneficiaries’ financial burden considerably, especially those who are prescribed high-priced specialty cancer drugs, many of which put them in the catastrophic phase by the end of January in a given year, with no limit on out-of-pocket expenditures. In all probability, the $2,000 cap will lead to more utilization of specialty drugs and better patient adherence.

The Part D overhaul will also force payers and drug makers to rethink their strategies vis-à-vis cancer drug pricing and reimbursement. Payers will have to strike a harder bargain with drug makers when purchasing specialty pharmaceuticals. As payers won’t be able to fully offset their higher burden of cost management by raising premiums – there will be a 6% annual cap on premium increases. There will very likely be increased use of utilization management tools. And, perhaps most importantly, a more competitive market with more use of utilization management tools, such as prior authorization, step edits, and quantity limits. Also more use of outcomes-based pricing models. 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.

Historically, as new checkpoint inhibitors, anti-PD-1 and PD-L1 agents, have gained approval – such as Jemperli (dostarlimab) in April of 2021 - price competition has not been a factor. This is extraordinarily unusual, given how relatively crowded the various oncology indications targeted by checkpoint inhibitors have become; from breast, renal, and colorectal cancer, to melanoma and non-small cell lung cancer. Several companies, including traditional ones like Lilly but also new entrants such as EQRx, are seeking to disrupt this space by offering lower-priced alternatives.

Outside the U.S., oncology drug pricing is generally heavily regulated. And, we observe that certain drugs may not be reimbursed by government (monopsonist) purchasers if there isn’t sufficient clinical benefit to justify the price. Moreover, in international markets, outcome- or value-based pricing strategies for cancer drugs are commonplace, which they aren’t yet in the U.S.

However, Medicare Part D restructuring alters the competitive landscape considerably. For high-priced specialty pharmaceuticals, in particular, it will become increasingly important for payers to contain costs by way of utilization management, promote the use of generics and biosimilars, and negotiate value-based prices. 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.

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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 on a variety of research, teaching, speaking, editing, and writing projects.

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When pharmaceutical manufacturers share clinical and economic data about their products in the pipeline, payers can prepare their budgets and formularies to launch value-based drug pricing arrangements as soon as a new treatment receives FDA approval. Pre-approval data sharing between manufacturers and payers gives patients quicker access to newly approved treatments.

As the healthcare system in the U.S. continues its transition from fee-for-service to value-based care, the sharing of healthcare economic information (HCEI) is becoming increasingly important to pharmaceutical manufacturers and healthcare payers seeking to enter value-based drug pricing arrangements.

In the past, drug manufacturers were hesitant to share HCEI and other pre-approval information with payers because regulations were unclear about the legal limits of this type of communication. But payers want HCEI from drug manufacturers for planning, formulary design, budgeting, and purchasing decisions. And lawmakers want to eliminate legislative barriers that inhibit the sharing of HCEI and the increased adoption of value-based healthcare.

The history of legislation surrounding manufacturer/payer communications

Policymakers and regulators, like the Food and Drug Administration (FDA), recognize the importance of big data and the sharing of HCEI for promoting value-based payment arrangements. Their first attempts to remove the legislative barriers to the exchange of HCEI between drug and device manufacturers and population healthcare managers did not produce the desired effects.

The first U.S. federal consumer protection law, the Food and Drugs Act, was enacted in 1906. This law’s consumer protections and law enforcement capabilities were strengthened by the 1938 Food, Drug, and Cosmetic Act (FD&C). Section 502(a) of the FD&C introduced and defined HCEI, giving the pharmaceutical industry their first instructions about what kind of economic data promotion could be communicated and with whom. But manufacturers refused to share information, fearing the penalties of accidentally disseminating off-label information.

Section 114 of the FDA Modernization Act (FDAMA) of 1997, amended FD&C Section 502(a) and provided a safe harbor for HCEI sharing. But manufacturers continued to resist sharing economic data because they felt the guidelines were still too vague about some topics, such as the definition of reliable scientific evidence and who was authorized to receive HCEI. The FDA failed to issue guidance on how to interpret the law.

The industry-wide push towards value-based care after the Affordable Care Act passed made clarification of Section 114 a priority again. In 2016, policymakers issued clarifying guidance about communications and transparency of HCEI, both pre- and post- FDA approval. The 21st Century Cures Act, Section 3037 further defined what types of HCEI and analyses could be used for drug promotion and to whom the HCEI should be communicated. The FDA published a draft payer guidance document in 2017 and then final guidance documents in 2018 suggesting ways to operationalize communications between pharmaceutical manufacturers and payers.

Current FDA guidance

An FDA press statement from June 2018 emphasizes that the 2018 guidance documents are meant to help pharmaceutical manufacturers provide payers with truthful, non-misleading background and contextual information about their products. Furthermore, manufacturers are encouraged to share both clinical data and HCEI payers need to make informed decisions about formulary management, cost effectiveness and reimbursement; this may be more and different data than the safety and efficacy data submitted by the manufacturer to the FDA for drug approval decisions.

The guidance, Drug and Device Manufacturer Communications with Payors, Formulary Committees, and Similar Entities–Questions and Answers, expands upon the sources of scientific evidence for HCEI as defined under Section 502(a). And the guidance clarifies who can receive HCEI, including public and private sector payers, formulary committees, technology assessment panels, third-party administrators, and other multidisciplinary parties.

This first guidance also addresses manufacturers’ communications with payers regarding unapproved uses of FDA-approved products. The FDA does not object to the sharing of this type of information as long as the manufacturer makes it abundantly clear in its communications what uses the product is not approved for.

The second guidance introduced in the FDA press statement is titled Medical Product Communications That Are Consistent With FDA-Required Labeling–Questions and Answers. It pertains to information not included in a drug’s labeling but information that a manufacturer may want to share with payers. Examples can include data from pre- and post-market studies or surveillance of patient compliance that can affect the measurement of a drug’s benefits to health outcomes in value-based contracts. (The first guidance offers safe harbor for communications related to the negotiations or implementation of value-based drug pricing agreements.)

Timing of information exchanges

Payers prefer to receive information regularly from manufacturers during the latter part of the FDA drug approval process. Annual budgets and formulary planning are more difficult to forecast if payers don’t have data in advance to prepare for the coverage of a new drug. Payers are more likely to make a newly approved treatment available to patients without delay when manufacturers share the clinical data and HCEI needed to make formulary and pricing decisions during pre-approval.

Under the FDA’s accelerated approval process, therapies sometimes become available to patients even before the publication of clinical trial data is complete. Payers say, ideally, they would like clinical and HCEI data about new products 12 to 18 months before the projected FDA approval date.

Many manufacturers wait to begin communications with payers until just 6 to 12 months before their product’s expected approval date. Recognizing the importance of HCEI in negotiating value-based drug pricing arrangements, some manufacturers have included HCEI in their FDA product dossier and promotional materials for payers.

The FDA guidance recommends increased transparency about cost data, including price range, price parity with competitors, price premiums, discounts, and inflation adjustments. Some manufacturers and payers prefer to wait for final clinical trial data before discussing pricing. Post-approval data-sharing of real-world evidence must continue between manufacturers and payers to implement value-based drug pricing agreements.

The Lyfegen solution

With most regulatory barriers removed and value-based contract communications exempted from FDA reporting, policymakers hope to see an increase in value-based drug pricing arrangements. Manufacturers and payers can partner with third-party vendors like Lyfegen to employ technology that facilitates easy, continued data-sharing for innovative pricing agreements.

Lyfegen is an independent, global analytics company that offers a value-based contracting platform for healthcare insurances, pharma, and medtech companies wanting to implement value-based drug pricing arrangements with greater efficiency and transparency. The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable information about drug performance and cost.

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.

To learn more about our services and the Lyfegen Platform, book a demo.

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.

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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.

Pharmaceutical regulating authorities in the U.S. and Europe are under increasing pressure to approve new treatments as quickly as possible. Expedited approval programs were created to speed up patients’ access to innovative treatments that meet unmet health needs or treat life-threatening diseases. But concerns about post-approval follow-up persist. Value-based drug pricing arrangements are a solution that generates real-world data and evidence of a drug’s safety and benefit to health outcomes.

Global health authorities must consider the risks of bringing a new drug to market quickly with limited data about a product’s safety and effectiveness–these risks versus the potential benefits of a new drug that addresses an unmet medical need, alleviates a public health emergency, or saves a patient’s life. The U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) are the ones weighing those risks and benefits and guarding the safety of pharmaceutical products and medical devices.

The usual approval process for pharmaceutical products is similar for both agencies. It includes pre-clinical testing, three clinical trials, and a final approval before manufacturers can sell their drugs to patients. Drugs that show potential and meet certain criteria may qualify for an expedited approval process.

Expedited drug approval programs

Both the European and U.S. agencies have developed expedited approval programs to speed up the process of drug development and approval when a treatment shows the potential to meet an unmet medical need or treat a life-threatening condition. A new drug may qualify for consideration under more than one expedited approval program.

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FDA programs:

· Priority-review designation (PR) – started in 1992, ensures the submission application will be reviewed within 6 months instead of the usual 12 months

· Accelerated approval (AA) – started in 1992, allows drugs to be approved using a surrogate endpoint instead of the outcomes of a clinical trial

· Fast-track designation (FTD) – started in 1997, a process to expedite the development and review of drugs designed to treat unmet medical needs and serious, life-threatening conditions

· Breakthrough-therapy designation (BTD) – started in 2012, speeds the development and review of drugs with the potential for better health outcomes compared to the results of current treatments on the market

Related Post: Value-based pricing vs best price? Medicaid's best price problem

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EMA programs:

· Accelerated assessment – started in 2004, a review of the application to be completed in 150 days instead of 210 days if there are no major objections from the authorizing agency

· Exceptional circumstances authorization – started in 2005, eligible for drugs that treat extremely rare diseases and where it is not possible to conduct large clinical trials

· Conditional marketing authorization (CMA) – started in 2006, accelerates approval of drugs designed to meet an unmet medical need or serious, life-threatening disease

· Priority medicines scheme (PRIME) – started in 2016, reviewers are appointed earlier than usual in the development process, mostly used for orphan medicines

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Comparing FDA and EMA use of expedited approvals

A study published in 2020 in The BMJ (British Medical Journal) compares the use of expedited approval programs by the FDA and the EMA. The focus of the study included approvals of new medicines from 2007 to 2017. During that time, the FDA approved 320 new drugs, and the EMA approved 268.

The study shows that, as of April 2020, there was an overlap of 75% (239) of new drugs which were approved by both the FDA and the EMA. Most of the drugs approved by both agencies were developed to treat cancer, digestive and metabolic disorders, or blood and cardiovascular disorders.

Out of the 320 drugs the FDA approved, 57% (181) of the new drugs qualified for at least one of the FDA’s accelerated approval programs. Out of the 268 drugs approved by the EMA, only 15% (39) qualified for one of the EMA’s expedited approvals.

A different study of global drug approval programs, covering January 2007 to May 2020, focused on expedited approvals for 128 new cancer drugs. The EMA approved 73% (94) out of the 128 new drugs and qualified 46% of them through expedited approval. The FDA expedited 91% (117) of the new cancer drugs through at least one accelerated approval program. (In 2019, all the cancer drugs the FDA approved during the year qualified for expedited approval.)

Of the six jurisdictions in the study, the FDA was the first to approve 80% (102) of the new cancer drugs. In Europe, delays in submissions of regulatory applications slowed many of the approvals. The EMA’s approvals of the same 102 drugs took an additional median time of 9.7 months.

Related Post: Indication-specific pricing to make inroads in the U.S.

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Post-approval confirmatory trials

The expedited approval process in both Europe and the U.S. relies on post-market, real-world clinical data to confirm the safety and effectiveness of a drug. After the FDA or EMA grants expedited approval and the drug is on the market, the manufacturer is required to conduct confirmatory trials to gather enough real-world evidence to transition the drug from an expedited approval to a regular approval. Both the FDA and the EMA carry a backlog of confirmatory trials that were not completed on time.

An NPR (National Public Radio) analysis of FDA and National Institutes of Health data showed there are around 200 drugs with expedited approvals currently on the U.S. market. Many drugs, especially cancer treatments, have more than one accelerated approval to cover expanded uses. Close to half of these drugs transitioned to standard approvals after confirmatory trials, and another 9% were withdrawn.

The 30 years of data NPR reviewed also revealed that 42% of confirmatory trials didn’t start within the first year after the drug was made available to patients. Some confirmatory trials were delayed by three or more years, and even up to ten years.

The EMA also appears to have a substantial percentage of manufacturers who are slow to transition expedited approvals to standard approvals. In 2016, only about half of the drugs that received expedited approvals from the EMA had converted to standard approvals. Manufacturers who switched to standard approvals took an average of 4 years to complete the conversion process.

Gathering real-world evidence through value-based drug pricing arrangements

Both healthcare payers and drug manufacturers benefit from value-based drug purchasing arrangements for drug treatments that come to market under expedited approval programs.

For manufacturers, the real-world evidence generated by a value-based agreement may be quite helpful for a few reasons. First, the data could satisfy the requirements for post-approval confirmatory trials. Second, manufacturers can show with real-world evidence that their treatment offers better benefits to patient outcomes as compared to competitors’ products. Third, manufacturers can use the data supporting the real-world effectiveness of their product to negotiate and justify their drug’s list price and preferential position on a payer’s formulary.

While payers want the expedited approval process to bring treatments for unmet needs to patients as quickly as possible, they may still have unanswered questions post-approval about a new drug’s benefits. Under a value-based arrangement, payers can collect and analyze real-world evidence to address their uncertainty and concerns about a drug’s safety, benefit to patient health outcomes, and cost-effectiveness.

Value-based pricing agreements between payers and manufacturers allow both parties to share the financial risk of a drug not performing as expected. And if a drug underperforms, real-world data from the value-based agreement can reinforce the terms of a manufacturer’s rebate. Therefore, manufacturers willing to share risk and enter value-based drug purchasing arrangements with payers have a competitive advantage.

The Lyfegen Solution

Lyfegen is an independent, global analytics company that offers a value-based contracting platform for healthcare insurances, pharma, and medtech companies wanting to participate in value-based drug pricing agreements. Lyfegen’s software platform includes three-fold functionality to implement value-based, data-driven agreements with greater efficiency and transparency: data ingestion, agreement execution, and insights generation. The Lyfegen Platform collects real-world data and uses intelligent algorithms to provide valuable information about drug performance and cost.

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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To learn more about our services and the Lyfegen Platform, book a demo.

Die Vertragssoftware von Lyfegen wird von Kostenträgern im Gesundheitswesen und führenden Pharmaunternehmen eingesetzt, darunter Novartis, Roche, MSD, Bristol Myers Squibb (BMS) und Johnson & Johnson.

NEW YORK/BASEL, 20. September 2022 /PRNewswire/ – Lyfegen, ein globales Healthtech-SaaS-Unternehmen, das den Übergang von volume-zu value-based Healthcare für hochpreisige Medikamente vorantreibt, gab heute eine überzeichnete Serie-A-Finanzierungsrunde über 8 Millionen Dollar bekannt, die vom Investmentfonds aMoon mit zusätzlicher Beteiligung von APEX Ventures und weiteren Investoren angeführt wurde.

Derzeit sind weniger als 2 % der Krankenversicherten, die Spezialarzneimittel benötigen, für 51 % der Arzneimittelausgaben verantwortlich. Die Kosten für Spezialarzneimittel in den USA laufen aus dem Ruder: Sie stiegen allein von 2020 bis 2021 um 12 % – und es gibt keine Anzeichen für eine Verlangsamung, denn es kommen immer mehr Zell- und Gentherapien auf den Markt. Infolgedessen wird Value-Based Contracting, die Nutzung wertorientierter Verträge, für die Kostenträger des Gesundheitswesens zu der entscheidenden Alternative, um nur für Medikamente zu zahlen, die tatsächlich wirken.

Bis 2025 werden die Nettoausgaben für Medikamente in den USA voraussichtlich bis zu 400 Milliarden US-Dollar betragen. Darüber hinaus kommen regelmässig neue Medikamente auf den Markt. Es fällt Pharmaunternehmen immer schwerer, sich mit den Kostenträgern auf kommerzielle Bedingungen zu einigen. Damit steigt die Gefahr, dass Patienten keinen Zugang zu lebensrettenden Therapien erhalten. Lyfegen hilft Regulierungsbehörden, Pharmaunternehmen und Kostenträgern bei der Einführung wertorientierter Zahlungsmodelle, indem sie den gesamten Prozess der Datenerfassung, Anonymisierung und Vertragsverhandlungen für alle Parteien digitalisiert. So kann die Preisgestaltung und Kostenerstattung für Medikamente vereinfacht werden.

„Wir freuen uns, diese Finanzierungsrunde bekannt zu geben und dieses Vertrauensvotum von aMoon, APEX und weiteren Investoren zu haben, die den Wandel im Gesundheitswesen verstehen und unser Bestreben um den Ausbau der Lyfegen-Plattform unterstützen", sagte Girisha Fernando, CEO und Gründer von Lyfegen. „Wir arbeiten derzeit mit führenden staatlichen Kostenträgern, Krankenversicherungen in Europa, den USA und dem Nahen Osten sowie mit einigen der weltweit grössten Pharmaunternehmen zusammen. Wir beabsichtigen nun, unsere Präsenz in den USA weiter auszubauen und Partnerschaften mit privaten und öffentlichen Krankenversicherungen einzugehen. Die Abkehr von der volumenbasierten Gesundheitsversorgung war noch nie so notwendig wie heute, und wir freuen uns, dass wir eine wichtige Rolle bei der Umstellung auf Value-Based Contracting spielen können."

„Lyfegen adressiert einen bedeutenden Marktbedarf in einer Branche, die sich dramatisch und schnell verändert, und wir sind begeistert, dass wir mit unserer Investition dazu beitragen können, ihre Anstrengungen zu unterstützen", erläuterte Moshic Mor, General Partner bei aMoon und ehemaliger Partner bei Greylock and Greylock Israel. „In Zeiten von Budgetdruck und Rezession im Gesundheitswesen braucht die Welt Lösungen wie die von Lyfegen mehr denn je. Wir sind stolz mit diesem erfahrenen Führungsteam zusammenzuarbeiten, das weiterhin den Zugang zu neuen Medikamenten verbessert, während es die wertorientierte Gesundheitsversorgung immer mehr zum Mainstream macht."

Informationen zu Lyfegen

Lyfegen ist ein unabhängiges, globales Softwareanalyseunternehmen, das eine wert- und ergebnisbasierte Vertragsplattform für Krankenversicherungen, Pharma- und Medizintechnikunternehmen sowie Krankenhäuser auf der ganzen Welt bietet. Die sichere Plattform identifiziert und operationalisiert wertbasierte Zahlungsmodelle kostengünstig und macht diese mit einer Vielzahl von realen Daten und maschinellem Lernen skalierbar. Mit der zum Patent angemeldeten Plattform von Lyfegen können Krankenversicherungen und Krankenhäuser eine wertorientierte Gesundheitsversorgung einführen und skalieren und so den Zugang zu Behandlungen, die Gesundheitsergebnisse der Patienten und die Kostenersparnis verbessern.

Lyfegen hat seinen Sitz in den USA und der Schweiz und wurde von Persönlichkeiten mit jahrzehntelanger Erfahrung im Gesundheitswesen, in der Pharmaindustrie und im Technologiebereich gegründet, um den Übergang von der volumenbasierten und kostenpflichtigen Gesundheitsversorgung zur wertorientierten Gesundheitsversorgung zu ermöglichen. Weitere Informationen finden Sie auf www.lyfegen.com.

Verwandte Links:

https://lyfegen.com/

Linkedin: https://www.linkedin.com/company/lyfegenhealth

Pressekontakt: yael@gkpr.com

Ansprechpartner für Investoren: investors@lyfegen.com

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Read the Press Release on PR Newswire

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.

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.”

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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.

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!

MEET THE LYFEGEN TEAM

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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