Top Ten Learnings & Recommendations for Manufacturers Following the First Wave of the Medicare Drug Price Negotiation Program
Following many months of negotiation, CMS has announced the new maximum fair prices (MFPs) based on the Inflation Reduction Act’s (IRA), Medicare Drug Price Negotiation Program - the Negotiation Program for short…
The true success of the Negotiation Program for both CMS and manufacturers is difficult to assess due to variations in lifecycle stage, portfolio mix, company priorities and pipeline.
Although tempting, it is hard to make comparisons between MFPs without context.
What is interesting to consider are the various approaches to the negotiations that manufacturers took and the impact on their business, given that the Negotiation Program is likely to remain an ongoing feature of US market access.
During the first round of the Negotiation Program, Verpora’s team of strategic negotiators, human performance experts and former government payers assisted manufacturers in preparing for the challenge. In this article, we share our non-confidential top ten learnings and recommendations that could help brands in future negotiations.
Verpora’s guidance for manufacturers entering the Medicare Drug Price Negotiation (MDNP) Program
1. A priority decision for manufacturers entering the Negotiation Program is how do they want the brand to conduct itself during negotiations? Depending on the manufacturer’s portfolio, the Negotiation Program may not be just a one-brand-one-year event, but a lifetime of negotiations.
Recommendation for manufacturers
Early in the process, form a cross-functional team of senior leaders and functional heads spanning brand, finance, legal, government affairs, medical & market access. The aim of the team is to decide on the negotiation strategy.
Educate and align the cross-functional team on the principles of strategic negotiation excellence and payer psychology to government HTA negotiations. Ground-work at the early stages provides a common language, consistent strategy and improved corporate decision making later.
2. From start to finish, the Negotiation Program is extremely demanding on time and covers many departments.
Recommendation for manufacturers
Once macro decisions have been made by the broader cross-functional team, quickly rationalize into a core working group of empowered functional leads (below VP-level). This team should have responsibility for creating the value story, writing the submission and executing the in-person negotiations. Leaders need to ensure the group has dedicated resource and time to work on the Negotiation Program.
3. CMS’s published approach to the Negotiation Program may exclude QALYs but significant lessons can be learnt from European Health Technology Assessment (HTA) negotiations.
Recommendation for manufacturers
External support is required in the form of specialized input from former HTA payers, supported by expert CMS legal counsel and negotiation strategists.
4. Senior leaders and VPs may want to lead negotiations, they shouldn’t - their role is to run the overall business.
Recommendation for manufacturers
For many reasons (that can be explained separately), keep the “top brass” out of the face-to-face negotiations.
However, senior leadership need to be kept informed throughout the value story development, submission and negotiations - especially when key decisions are required. Keep this process efficient, as daily involvement in the Negotiation Program will impact leaders’ ability to run the business.
5. The value story starts with the original written submission.
Recommendation for manufacturers
The initial submission is not just a legal document but should be based on the value story and negotiation framework. Not just external legal counsel but former government HTA payers and external negotiation strategists should be included at the start of process.
6. In the future, more generics are likely to be used as therapeutic alternatives (TAs)¹.
Recommendation for manufacturers
Difficult to combat but a NUTA process (Notice, Understand, Think Ahead) should be used for any brands potentially under review in IPAY 2027 and beyond. NUTA will help identify generic threats early, creating time to develop messages and evidence planning.
7. Real-world and comparative effectiveness evidence, especially in populations of interest to CMS, are identified in the initial guidance² as high value and can help evolve messaging.
Recommendation for manufacturers
If this evidence doesn’t presently exist, it should be collected and ideally published. CMS generates the raw data to achieve and trusted 3rd party suppliers can help. Start early (potentially several years) as time to analyze and publish is significant.
8. Generally, people make successful agreements based on three elements – commercial terms, internal politics & personal beliefs.
Recommendation for manufacturers
Delivering powerful, evidence-based messaging in the value story is vital. While payers are unlikely to turn around and say a manufacturer is right, the use of such messages can stimulate personal beliefs and leverage negotiation.
9. Decisions are made by a complex network of people in which individuals may vary from meeting to meeting. A manufacturer’s value story needs to be shared across this network and retained in memory over extended time periods.
Recommendation for manufacturers
Keep it simple and maintain a positive environment! If the people in room can’t or don’t want to effectively communicate your value story to the wider network, the chances of optimizing the negotiation reduce significantly.
10. Leave the ego at the door and Rehearse! Rehearse! Rehearse!
Recommendation for manufacturers
As the saying goes, “get comfortable, being uncomfortable!” Before every face-to-face negotiation secure time as a team to agree on the approach, assign roles, and practice. Ideally, this practice needs to be in front of peers, external negotiation strategists, legal counsel and payer experts. It’s tough work but for the folks we worked with, completely worth it!
Preparing for the next wave of the Medicare Drug Price Negotiations? Use Verpora’s knowledge to build a stronger negotiation team to tackle IPAY 2027 head-on
If you are a manufacturer looking to develop your strategy and capability for any negotiations, our expert, and experienced, team at Verpora would be pleased to help. We offer personalized support, custom workshops and live negotiation simulations to help guide the business through any types of government and commercial contracting negotiations.
Reach out today to understand how we could help strengthen your approach and develop the confidence you need in all your negotiations.
Email nick.merryfield@verpora.com
Phone 603-821-0606
About the Author
Nick Merryfield
Head of Business Consulting
CEO, Verpora
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Nick is the driving force behind the innovative combination of human performance factors, negotiation strategy and payer behavior to optimize pharmaceutical contracting.
A chemist by training, Nick started his commercial career with SmithKline Beecham. In 1999 he left the industry to pursue his passion for building businesses to meet the evolving demands of the life sciences sector. This decision has taken Nick on an exhilarating twenty-five-year journey spanning market access, real-world evidence and clinical research. Today, Nick is solely focused on improving patient outcomes through the innovative work undertaken by the team at Verpora, a company he jointly founded in 2015.
About Verpora
Verpora is a highly-specialized agency in pharmaceutical contracting innovation and value-based pricing.
The organization’s philosophy is based helping pharmaceutical companies demonstrate the true value of their innovations to stakeholders. In a science and evidence-led sector, the relationship between people, data, and the systems in which they interact is often overlooked. Applying a novel, first-of-its-kind approach, Verpora has pioneered the integration of human performance factors with payer behavior, data science & commercial negotiation strategy to help manufacturers deliver outcomes that are outstanding.
Sources
Disclaimer
Content in this article is based on secondary market research using externally sourced data available in the public domain. Opinions and commentary are those of the authors and do not reflect views of any commercial organisation or government body mentioned in the article. For any questions relating to the article please contact nick.merryfield@verpora.com.
