Differentiating Your Product for Payers

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Differentiating Your Product for Payers

Getting on the formulary is more difficult than ever before, given the number of new, high-cost drugs that are entering the market. That’s one of the reasons why Frank Dolan sat down with Steve O’Malley, Executive Vice President of Market Access at Two Labs, as part of the ARSENAL Leader Lab series.

In this article, we’ll give an in-depth explanation of one of the subjects the two men discussed: the importance of differentiating your product for payers. This topic includes things to keep in mind whether you’re trying to enter a crowded class or you’re presenting an orphan drug.

Understand How Your Drug Fits in the Formulary

When approaching payers, you need to understand how your drug will fit into their formulary.

Steve O’Malley says, “If you’re in a crowded class, one drug usually has to be removed or displaced in order for you to be added. So, there are very, very crowded categories like the immunology category where the formularies are quite restrictive. In other cases with all these new specialty and orphan drugs, there’s a product for a disease that payers have never heard of.”

This is complicated by the fact that some areas of medicine can have both competitive classes and orphan drugs. O’Malley uses oncology as an example. On the one hand, “Payers have more choices to actually make tradeoffs” for diseases like breast cancer and prostate cancer.

In some subcategories of oncology, on the other hand, “There might only be one or two products. The patients are so specific — they’re either refractory patients or second or third line patients — and the products have to match the patients in order to work.”

You need to understand your drug and how it fits into the entirety of the treatment paradigm from the payers point of view.

While this is a medical question, it’s also a marketing one. If you’re in a crowded class, you need to pay careful attention to the drug you’re trying to replace. What is it that makes your product better?

If you have a specialty or orphan drug, you need to be prepared to educate the payer so they understand exactly what problem you’re solving. Because payers are busy, it’s important to be prepared to answer any questions they have. We’ll give a more thorough explanation of orphan drug approval in the next section.

Getting Payers to Approve Orphan Drugs

It can be intimidating to bring orphan drugs to market, given their high cost. O’Malley says, “We’re talking about products that are used only for a hundred patients, a thousand patients with very high price tags. And there’s so many of these products coming out. I think it has really dominated the budget.”

If your product is effective, though, you should be prepared to confidently make your case to payers. O’Malley explains that “Payers for the most part are saying yes to the products. As long as the patients really meet the criteria for using those products, they’re getting access to them.”

More than anything, it’s important to ensure that payers understand the advantages that your drug offers. Who is it intended for? Is it a permanent solution? Does it need to be paired with other treatments, like gene therapy?

These are just a few questions you should be prepared to answer when making the case for an orphan drug to be added to the formulary. More than anything, payers want to make sure the drug they’re paying for is effective.

Looking to Bring Your Drug to Market?

There’s a lot of competition to get on the formulary, which is why you want to have as much knowledge as possible about the payer mindset before meeting them. Steve O’Malley has been in the managed care space for over 30 years, and during that time he’s amassed a wealth of knowledge about what payers want.

If you’d like to speak with him about this knowledge, he’s always happy to have a discussion. You can reach out to him via his LinkedIn page, or by sending him an email at steve.omalley@twolabs.com.

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