pdci-h3 2016 private payer pla deck

Copyright© 2016 by PDCI Market Access Inc. and H3 Consulting. The information presented is the property of PDCI Market Access and H3 Consulting. Unauthorized reproduction or distribution of this material is prohibited.

Second Joint Industry/Payer SurveyReleased November 2016

PRIVATE PAYER PRODUCT LISTING AGREEMENTS (PLAs) IN CANADA

H3 ConsultingHealth Research & Strategy

/ Communicated

• PDCI and H3 designed an online survey seeking stakeholder insights on private payer PLAs from pharmaceutical manufacturers and private payers.

• In total, 30 complete responses were received from 25 individual pharmaceutical companies and five different private payer representatives.

o Pharmaceutical participants included senior market access managers with private payer accountability.

o Responding private payers were senior product and claim managers working in group benefits at insurance companies or pharmacy benefit managers (PBMs).

• Participants were surveyed from June 18 through July 18, 2016, and were assured of complete anonymity.

For a free copy of the report, please contact one of the authors.




H3 ConsultingHealth Research & Strategy

/ Communicated

• Respondents were sorted into one of four question streams based on their stakeholder category (manufacturer or private payer representative) and whether they had experience negotiating private payer PLAs.

Manufacturer

Negotiation NaïveNegotiation

Experienced

N=25

N=14 N=11

Private Payer

Negotiation NaïveNegotiation

Experienced

N=5

N=4 N=1

This slide deck focuses on Negotiation Experienced Respondents.

One incomplete response was entered in each stakeholder category. These respondents did not complete the survey and thus are not counted in the recorded sample sizes.

Figure 1. The percentage of manufacturers and private payer respondents indicating they have successfully negotiated a PLA agreement: manufacturers (n=25) and private payers (n=5).


56%

44%

80%

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Yes No

% R

esp

on

den

ts

Responses

Manufacturers

Private Payers



H3 ConsultingHealth Research &

Strategy / Communicated

Figure 2. The drug product type(s) for which successful PLAs were negotiated by manufacturer (n=14) and private payer (n=4) respondents.

11

4

0

1 1

4

2

1

0 00

2

4

6

8

10

12

Specialty Drug TraditionalDrug

Oncology Drug Drug for a RareDisease

Prefer Not toDisclose

Re

spo

nse

Co

un

t

Drug Types

Manufacturer

Private Payer

Specialty vs traditional drugs as explained in the survey.

Specialty Drug: Medications used to treat chronic, complex conditions. They are usually costly, require special storage and handling, need intensive clinical monitoring and require frequent dosing adjustment.

Traditional Drug: Medications that are easy to self-administer and require less intensive clinical monitoring, such as those used to treat diabetes and high blood pressure.







0 2 4 6 8

<1 year

1 year

2 years

3 years

Response Count

Agr

eem

ent

Du

rati

on

Private Payers

Manufacturers

Figure 3. Average duration of PLAs negotiated by manufacturer (n=14) and private payer respondents (n=4).






Figure 4. Rationale provided for PLA negotiation from manufacturer (A: n=14) and private payer (B: n=4) perspectives.

A B

Response Counts

Rat

ion

ale





0 1 2 3 4 5

The manufacturer approachedus about negotiating a PLA

They have a drug product ortherapeutic class suitable for a

PLA

Positive relationship withmanufacturer

Key or high profile productcoming to market

0 2 4 6 8 10 12

Request from private payer

The number of patient lives covered

Positive relationship with the payer

PLA was required for listing

Other*

Counter historical negative listingrecommendations by the payer

*Manufacturer “other” responses refer to “retaining criteria in the face of competition”, “not applicable”, and “inadequate preparation on behalf of payers to cover costs associated with the therapeutic area in question”.


Figure 5. PLA experienced manufacturer (n=14) and private payer (n=4) perspectives of the leverage held by manufacturers in a PLA negotiation.





0%

10%

20%

30%

40%

50%

60%

70%

80%

First to market/Fulfillsunmet need

Competitive price Supporting services Experience innegotiating PLAs

Other*

Res

po

nse

Co

un

ts (

%)

Leverage

Manufacturer

Private Payer

*Manufacturer “other” responses refer to “knowledge of the market” and “best in class products”.


Figure 6. PLA experienced manufacturer (n=14) and private payer (n=4) perspectives of the leverage held by private payers in a PLA negotiation.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

The size of thepayer's book of

business

Experience withnegotiation

Coverage ofexisting products

Payer could refuseto list without a

PLA

Market reputation Restricted accessto similar products

Other

Res

po

nse

Co

un

ts (

%)

Leverage

Manufacturer

Private Payer

*





*Manufacturer “other” responses refer to payer “further restricting listing”.


9

4

1

3

Price rebate

Cap on expenditures(cost per patient)

Cap on expenditures(total cost)

Pay for performance

Outcome based

Other

4

2

1

1

1

Price rebate

Cap on expenditures(cost per patient)

Cap on expenditures(total cost)

Pay for performance

Outcome based

Other

Figure 7. PLA types negotiated as per manufacturer (A: n=14) and private payer (B: n=4) respondents.

A B





* *

*Manufacturer “other” responses refer to “criteria”, “not applicable”, and “prefer not to disclose”.






Figure 8. Average negotiation process duration as per manufacturer (n=14) and private payer (n=4) respondents.

0

1

2

3

4

5

6

7

0-6 months 6-12 months ≥ 12 months

Res

po

nd

ent

Co

un

t

Average Negotiation Time

Manufacturers

Private Payers

Negotiation process, as defined in the

survey, is the time from initial

communication to the agreement’s

execution.


Figure 9. Respondents’ perspective on the issues encountered while negotiating PLAs (manufacturers n=14, private payers n=4).

0 2 4 6 8 10 12

Financial reconciliation of PLAs

Confidentiality of PLAs

Clarity of PLA process

Timeliness or duration of negotiation process

Appropriate expertise or adequate flexibility from oppositenegotiating party

No issues

Other

Respondent Count

Issu

es

Manufacturers

Private Payers





*

* Based on manufacturer responses, “Other” includes “not applicable”, “the variance of payers to implement various strategies” and “negotiations with private payers in the early stages lead to many of the issue options provided”. Based on private payer responses, “Other” refers to “level of data requested”.


Figure 10. Respondent perspective of how well the negotiated PLA delivered on their expectations(manufacturers n=14, private payers n=4).





0 2 4 6 8 10 12

Strongly disagree

Disagree

Neither agree nor disagree

Agree

Strongly agree

Respondent Count

Ne

goti

atio

n S

atis

fact

ion

Manufacturers

Private Payers






Conclusions and Outlook• PLA activity is growing quickly, driven by both private payer and

manufacturer interest.

• Manufacturers have significant public PLA experience and are more sophisticated. Few insurers have PLAs, but they are the largest ones and are positioning themselves to control access to high-cost new drugs.

Overall, the private market is cautious: agreements are shorter and focus on product price. Private PLAs will become more standardized.

• Manufacturers will require a strategy that understands the evolving and different interests, players, goals and resources of the private market.

• Insurers will need to measure and communicate the value of PLAs to plan sponsors and members in order to commit more resources to this tactic.


Arvind ManiDirector of Strategy, Policy and Business

DevelopmentPDCI Market Access

Cell: 613.864.8645 Email: [email protected]

Sherry O’QuinnDirector of Reimbursement Strategy

PDCI Market Access


Chris BonnettPrincipal Consultant

H3 Consulting






mailto:[email protected]



pdci-h3 2016 private payer pla deck

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