As you know, to address rising drug costs, the US Department of Health and Human Services (HHS) has proposed a rule that would eliminate safe harbor rebate protection for Part D prescriptions paid under the Medicare and Medicaid programs. Under the proposed rule, the new safe harbor would only be protected if the amount was set in advance and used to reduce the drug price at the point of sale. The result would shift pharmaceutical drug formulary contracting away from rebates. The intent is to lower net drug costs and reduce patient out-of-pocket co-pays. If implemented on January 1, 2020, this will most likely spill over to the commercial market.
For podcasts drilling into the nuances of rebates:
Getting Rid of Drug Rebates
What Should Pharma Be Doing Right Now About the HHS Proposal to Effectively Curtail PBM Rebates?
Win in a world without rebates
A world without rebates will reshape the competitive landscape for drug manufacturers and require a fundamental transformation in brand differentiation from a reliance on contract rebates to options such as:
- Lower net cost
- Indication-based pricing
- Brand performance guarantees
- Efficacy, outcomes, and value
- Provider/patient preference and value trade-offs
Define value from your customer’s perspective
The pharmaceutical payer marketing landscape for formulary and drug coverage has been undergoing significant changes, including:
- Demands for larger discounts
- Narrowing of formularies with stricter prior authorizations
- Requests for innovative contracting approaches such as outcomes guarantees
- Growing influence of the Institute for Clinical and Economic Review (ICER) as a credible US tech assessment entity
The proposed HHS change to the rebate safe harbor represents a seismic shift in the competitive landscape changing the basis of health plan/pharmacy benefit manager (PBM) Medicare and Medicaid Part D formulary access decision making to brand value. And the value of your brand must clearly address your customers’ needs.
Create the promise of value and prove it
Your brand’s value proposition demonstrates differentiators from your customers’ perspectives that make your product superior to its competitors. This value becomes the foundation for clear, concise, and compelling brand messaging. Brand value must be substantiated with credible supporting evidence that can withstand advanced formulary evaluations, guideline recommendations, and emerging technology assessment criteria. This creates the opportunity for brand inclusion on limited formularies and to propel your brand throughout its life cycle.
Key elements of an impactful value proposition include its ability to:
- Reflect customer priorities and distinguish brand differentiators vs its competition
- Recognize access value drivers for formulary coverage
- Provide strong proof of the value
- Be meaningful, credible, and sustainable
Evolve your brand message to stay ahead of the competition
Brand, payer marketing, market access and managed markets teams must now navigate fundamentally divergent forces associated with both the long-standing rebate safe harbor and preparing contingencies for the new landscape without rebates. In either case, brand value propositions must continue to evolve in both worlds as health plan/PBM Medicare and Medicaid Part D sponsors’ access value drivers and needs shift.
Why work with Aventria?
Introducing Aventria’s Post-Rebate Value Enhancement (PRoVE) Model™ for value propositions in a post-rebate world. The PRoVE Model™ efficiently evaluates your current value proposition and, if necessary, provides a framework and platform to quickly update it to meet the requirements of the fast-approaching new market environment.
To learn more about Aventria’s Post-Rebate Value Enhancement (PRoVE) Model™ in anticipation of a world without rebates and ensure your brand’s value proposition continues to resonate, please contact Dave Dierk at 215-489-9000 x103 or firstname.lastname@example.org, or Paul G. Pochtar, RPh, at
215-489-9000 x100 or email@example.com.
Making a difference in patient care by helping patients, providers, and payers collaborate on shared priorities
The views and opinions expressed are those of the author and do not imply endorsement by Aventria Health Group.