WHAT HAPPENED

On July 18, 2018, US Food and Drug Administration (FDA) Commissioner Scott Gottlieb delivered a speech at The Brookings Institution in Washington, DC, discussing how to bolster competition from biosimilars while maintaining innovation.

The Commissioner noted the absence of true competition among biologics from biosimilar products in the United States, similarly to what the country experienced 30 years ago with respect to generics. The Commissioner said that this situation is caused, in part, by what he views as anticompetitive practices implemented by branded manufacturers, such as:

  • Rebating schemes in which drug manufacturers bundle discounts to health insurers and employers across different pharmaceutical products;
  • Multi-year contracts granting important rebates to payors, often entered into right before the entry of a biosimilar on the market;
  • Volume-based rebates;
  • Tying rebates, i.e., when rebates are offered if a product is bought together with a biologic;
  • Patent thickets, i.e., when branded manufacturers’ own dense portfolios of overlapping intellectual property rights cover biologics; and
  • Bundling biologics with other products, i.e., when a product is sold together with a biologic.

The Commissioner then introduced a plan (Biosimilars Action Plan) intended to apply some of the lessons learned by the FDA with respect to generic drugs to accelerate competition from biosimilars. He presented the four core action items of the Plan:

  • Improve the efficiency of biosimilars and of the approval process;
  • Maximize scientific and regulatory clarity for companies developing biosimilars;
  • Develop communications to improve understanding of biosimilars among patients, providers and payors; and
  • Reduce tactics implemented by branded manufacturers to unfairly delay market competition.

With respect to this last action item, the Commissioner said that the FDA would work hand in hand with the US Federal Trade Commission (FTC) in order to address perceived anticompetitive behavior. 

WHAT THIS MEANS

Pharmaceutical companies and biotechs should bear in mind that the FTC could start looking more closely at competition among biologics and take action against branded manufacturers who are implementing strategies to delay the entry of biosimilars on the market.

These companies should thus assess their current contracting, discounting and patent protection strategies to ensure that they manage their exposure to antitrust risk.

The PPM industry is by no means immune to the ebbs and flows of a traditional marketplace. Since the consolidation bubble burst in the 1990s, PPMs have gone from practically extinct to a once-again substantial component of the health care delivery system. But with greater influence comes more pressure to respond, and adapting to today’s complex operating environment requires those in the PPM industry to ensure they are building the foundational structure needed to help practices adapt to external factors and achieve long-term success.

Here are three defining aspects of today’s complex PPM environment, as well as several important considerations to help navigate environmental uncertainties and create a better patient experience.

  1. Physician satisfaction and expectations are changing: As millennial doctors enter the workforce, they’re driving a sea change in terms of job expectations. With better work-life balance as a top priority, many young physicians are looking to be employees rather than employers, joining an existing practice instead of starting their own. Therefore, communicating what a PPM has to offer in terms of long-term incentives, rather than short-term profit margins, will be crucial to drawing in younger doctors and building a foundation that will last into the future.
  2. Reimbursement strategies are evolving: Payer models and expectations continue to shift. Patients are being folded into a system that’s evolving from fee-for-service to value-based reimbursement models. As of now, the federal government is the biggest source of health care reimbursements in the country, but how legislative changes to reimbursement frameworks will impact a PPM largely depends on the type of PPM in question. For example, dermatology providers will see a different impact on their billing, coverage, and procedure coding and documentation than medical oncology providers. PPMs are also increasingly being asked to consider the value they add to a practice, and having a solid reimbursement strategy can enhance that value.
  3. Legislative and regulatory restrictions may continue to shift: Recent surveys suggest that health care is top-of-mind for midterm election voters, regardless of political affiliation. Under the current administration, we’ve seen legislative focus on the Affordable Care Act, as well as access to generic and experimental medication, but have seen little legislative attention paid to PPMs. While the Affordable Care Act predicted the shift from fee-for-service to value-based care, it did not provide concrete regulations. Thus far, shifts to value-based care have been mostly voluntary among health care payers and providers. Whether that changes will be worth keeping an eye on.                                                                                                                                              It will also be worth keeping an eye on antitrust action, particularly with consolidation and collaboration happening at every corner of the health care space. In years past, most physician practice transactions have not been large enough to garner attention from federal antitrust authorities, like the Federal Trade Commission (FTC), as one Health Affairs paper cites. But as the trend towards consolidation continues and collaboration becomes key to transformation, expect to see more federal oversight.

While there are no concrete predictions in this industry (or else we could have safely avoided the pitfalls of the ‘90s), we expect that the factors above will influence future PPMs in some capacity. Just how much is the million-dollar question.

To stay up to speed on all of the regulatory challenges and growth opportunities in the PPM space, as well as the health and life sciences industries overall, bookmark our “Health & Life Sciences News” blog and connect with us on LinkedIn.

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