Pharmaceutical companies brace for adjustments with the approaching drug price openness requirement
In a significant move towards promoting price transparency in healthcare, the Transparency in Coverage rule, published by the U.S. Department of Health and Human Services, Department of Labor, and Department of the Treasury in 2020, requires hospitals and group health plans/insurance issuers to make specific healthcare price information publicly available.
This rule, aimed at helping people make cost-conscious healthcare decisions, strengthen consumer support, reduce surprise billing, create a competitive dynamic, and lower healthcare costs, has far-reaching implications for pharmaceutical stakeholders. The rule requires reporting of negotiated drug rates and services, but enforcement of the drug pricing file was temporarily delayed.
Currently, an initial schema for the drug pricing file is only available through the CMS GitHub for the Transparency in Coverage rule, and a new one is expected to be released by the Deutsches Institut für Medizinische Dokumentation und Information (DIMDI). Until the new schema is released, it is unclear whether payers will use the archived schema, how much detail will be required in drug price reporting, and how CMS will enforce compliance.
Manufacturers should optimize their infrastructure and resources to enable common access and accurate interpretation of price transparency data. Monitoring opportunities and risks across the portfolio and developing a price transparency strategy as a critical part of launch readiness can help mitigate the risks associated with the coming large-scale MRF availability.
Our team has deep experience with dissecting and interpreting hospital and payer transparency files. We help clients navigate hospital and payer data and determine risks and opportunities for key accounts by understanding customer net-cost recovery as well as average sales price implications. Forming analytic partnerships for accessing and utilizing these large data files to gain possible competitive advantage is another crucial aspect of our approach.
Drug price transparency could have expansive cross-functional implications for pharmaceutical stakeholders. Manufacturers should invest in comparative effectiveness tools to pinpoint where they can add value and maintain market share. Self-funded plans may pressure their pharmacy benefit manager partners to take on the role of drug price reporting, adding another layer of complexity to the landscape.
We continue to closely monitor price transparency guidance from CMS and other entities, generating actionable strategies for clients to adapt, position their portfolios, and launch assets ahead of the competition in a dynamic data environment. Manufacturers should monitor and develop data access strategies to protect their market positioning for current and pipeline products.
Payer MRFs tend to be much larger than hospital MRFs due to the method and scale by which payers are required to publish negotiated rates. Early drug pricing transparency files have been produced by payers like Optum and Blue Cross Blue Shield of Texas using the initial schema, and other payers are expected to follow suit when more guidance is available.
This ambiguity creates risk for both plan sponsors and manufacturers, potentially requiring supplemental analysis and analytic investments from manufacturers. Additional resources may be required to fully understand payer data limitations and accurately interpret the impact to manufacturer portfolios.
In conclusion, navigating the complex landscape of drug price transparency requires a strategic approach. By staying informed, investing in the right tools, and developing robust data access strategies, pharmaceutical manufacturers can position themselves for success in this evolving market.
