Access Insights 2024: Financial Headwinds and Tailwinds to Commercialization

PC: What were some of the main talking points of your “Financial Headwinds and Tailwinds to Commercialization” keynote speech?

Roth: I wanted to conclude something I started last year, which was the move my prescription presentation. Around two and a half years ago, we started getting calls from general medicine manufacturers, and they were hearing that patients weren't able to get their products. We had always taken that part of the industry for granted. It just moved slowly, and it took us a while to unearth what the problems were with it. The generics just kept deflating after the patent clip that started in 2017 and they reached a point now where some of the nation's pharmacies are literally losing between $1 billion to $3 billion a year on brands, and we have verified it over the last two and a half years, where launching a brand in a retail space is incredibly difficult right now.

So, 92% of what flows out of a retail pharmacy is generics, and that's where they make all their money, plus a cover a portion of the loss of their brands. Of the remaining 8%, 6.4 is top 100, so they have to have those, or they lose foot traffic. But the rest of it, the 1.6% that's left, that's the space in which all new items have to launch. There are 4,400 brands in that space. The pharmacies don't have it on the shelf, and a lot of these newer products are coming with prior authorizations and step edits. We’re seeing rates of abandonment between 40% and 50%, and manufacturers are realizing this more and more, and they're calling back. The industry is trying to respond by offering new models, such as digital pharmacies tech enabled hubs, but there's really no silver bullet to it. Patients are struggling to get access, and new non-specialty brands are struggling with this new model.

The reason I felt that it was important to talk about is because I don’t believe many people are aware, because the data that we need to highlight it, it's not available in any third-party data set. The e-prescription that flows through to the pharmacy is not picked up. So, the first time we as manufacturers can see the problem is in claims data, and that's where we have the 40% front end abandonment before we even run a test claim. That’s just become very problematic.

The second piece is seeing the problem and knowing what to do with it. This where I’m personally frustrated right now with a lot of the industry, because the market research leads understand it. I think the channel people understand it. But because the gap in the gross tenet is so great, the upper management of the pharma companies are trying to go in and they’re realizing how much has changed. Without the data, they don’t know what to do. The industry is either grasping at straws or not doing anything.

For now, our mission is to go therapeutic area by therapeutic area, product archetype by archetype, and drug class by drug class, and figure out, how do we optimize? These days, manufacturers are launching it typically takes nine to 10 months to establish a formulary position. In the meantime, you want to get demand flowing for your product, so they're finding ways to basically compensate pharmacy for the dispense without the drug being covered. But they're establishing a $35 copay. It’s a money losing proposition out of the gate, they're not standing up cash offerings, which I think is really where this should be going, and not just running at a loss leader position, because even as they establish the formularies, they are having trouble weaning themselves off those affordability programs.

We’re seeing to nets in the 70% to 80% that are that are persisting, even post-formulary coverage. As these manufacturers grow, they don't know how to pull it back, where to pull it back. So, our CEO talked about this. Really, we have to connect the commercial silos of the departments and make sure that the chief commercial officers understand how all these pieces are moving. Unfortunately, I'm being more unsuccessful than successful at the moment, and I'm not going to give up on it, because it's a big problem for our entire industry. We're facing the IRA, we're facing MF, we're facing MFPs, and we're still thinking through the ripple effects of what all that means to our industry.

Full Interview Summary: The pharmaceutical industry is currently facing significant challenges, particularly in terms of product access and commercialization. Factors such as pharmacy economics, prior authorizations, and step edits are making it increasingly difficult for manufacturers to launch new brands in retail settings. Additionally, the growing prevalence of generic medications is contributing to these challenges.

To address these issues, manufacturers are exploring various strategies. These include greater collaboration with stakeholders, increased use of data and technology, and innovative approaches to product launch and commercialization. However, the industry still faces significant hurdles, and finding effective solutions will require continued effort and innovation.

By leveraging data and technology, manufacturers can gain a better understanding of the challenges they face and develop more targeted and effective strategies. Additionally, increased collaboration between stakeholders, including manufacturers, pharmacies, and payers, is essential for addressing the complex issues facing the industry.