Join us at Device Talks Boston in October

More specific drug labels could simplify reimbursement

September 14, 2018

Most people think that the high cost of pharmaceuticals is largely driven by R&D costs.

But that’s only half the story. The other half is the hugely inefficient process of providing access to drugs for patients and reimbursing health care providers for their legwork.

The seemingly simple process of a physician’s office procuring a drug, administering it to a patient, and being paid for the product and the service involves at least six different entities in the United States. The list includes:

  • The prescriber
  • The provider’s office staff who “do the paperwork”
  • The patient’s insurance company
  • The patient’s pharmacy benefit manager (PBM)
  • A specialty pharmacy or onsite dispensing pharmacy
  • The drug manufacturer, who often supports the office with “paperwork help” and may provide a co-pay card to the patient.

Within each entity, there may be multiple individuals doing different jobs — authorizations, appeals, adjudication, claims processing, and documentation of medical necessity. Much like the production of a play in which a doctor and patient are the only actors on stage, it is the backstage crew that makes the event happen. But unlike the theater, a backstage crew that large should be unnecessary.

There are many drivers for why the process of treating a patient with a drug is complex, convoluted and expensive. I would assert that one of the main drivers is that most Americans have two types of insurance benefits — medical and pharmacy. It is often unclear which benefit pays for what, where, how much or how often. Because of this, office staff regularly submit the “paperwork” to both and see what happens.

Not only is this double the work for office staff, it doubles the work at the pharmacy benefit manager and payer organizations as the entities work on getting the drug approved for the patient and distributed to the site of care. It also doubles the confusion. The same specialty pharmacy may see two queries for the same drug for the same patient. Payer policies may be ambiguous, and staff have a yeoman’s job of sussing out which policy covers what. There is no educational degree or guide book that prepares people at provider offices, pharmacies or insurance companies to do this job. Staff learn by trial and error, which is painful, mistake-filled and a drag on the system.

Patients, who have the primary interest in this information exchange are often no help. How of many of us even know our health insurance is comprised of multiple payers?

The next best entity to direct the decision of how and where a medication is administered is the pharmaceutical manufacturer.

How can this be simplified? Who is in the best position to determine how a medicine should be delivered to the patient?

Many would agree payers are the ultimate decider of if and how a drug is paid for. They determine who dispenses it (which specialty pharmacy, for example) and to whom it is shipped (To the doctor? To the patient?). Many American would also say that something feels “wrong” about this. Payers should not have the most power in terms of directing an individual’s health care.

Pharma companies can help untangle the knot

In an ideal world, prescribers would have perfect information about all available treatments and be free to prescribe whatever is best for an individual patient with no access or affordability barriers. America is a long way from this ideal.

I would argue, then, that the next best entity to direct the decision of how and where a medication is administered is the pharmaceutical manufacturer. It is the pharmaceutical companies who are closest to the science of the drugs. Pharma companies are comprised of scientists who invent the molecules that change and save lives. They are the experts in the science and best able to assert if a patient needs physician supervision when receiving a drug —which means the medical benefit would cover it — or if the drug is safe enough or in an appropriate format for a patient to take it at home — which means the pharmacy benefit pays for it.

They can do this with the one thing that means the most in pharmaceuticals — the label. It is here where the company, with the FDA’s approval, can provide directions that will directly influence the actions of payers, pharmacy benefit managers, providers and patients.

Clear instructions on a label could reduce confusion around product delivery and administration. For example, a label could say “must be injected under physician supervision,” which means the drug must go to a provider’s office, no questions asked. By contrast, if the label says “may be self-injected or administered under physician supervision,” then it is less clear. What was likely intended as a product benefit (i.e. having the option to treat a patient in the office or elsewhere) becomes an access and reimbursement mess.

An investment that provides differentiation

More specific labeling will require pharmaceutical companies to create a unique upstream marketing focus for each drug they launch, making sure the drug is developed, tested, and approved for a label that directs and simplifies the downstream process. Sound expensive? You bet it is. And this is on top of the millions of dollars a pharma company risks when investing in new science. It won’t necessarily improve the public’s perception of pharma companies, either, but it could greatly improve the relationship with providers and payers by simplifying the backstage work.

Without a doubt it sounds intimidating, but pharma’s increased investment to bring a drug to market will have a trickle-down effect that benefits everyone. A very specific, science-based label that unquestionably directs providers and payers will reduce confusion, complexity and costs.

For forward-thinking pharma companies, this approach to labeling could be a differentiator and strategic advantage. Combined with a unique go-to-market strategy for each drug, clear labeling could influence the process of how a physician’s office procures a drug, administers it to the patient, and gets reimbursed for it. It could make the process as simple as it SHOULD be. Such clarity will appeal to paperwork-beleaguered physicians and their office teams – and that’s a powerful go-to-market advantage.

But most importantly, it would benefit the patient. The easier we make it for a patient to access a drug, to confidently assess the out-of-pocket costs, to assure continuity of coverage, and to do this expediently and with minimal errors, the better all of our lives will be.