For drug developers the 505(b)(2) pathway presents an expedited pathway to FDA approval. In our experience, the conversation on 505(b)(2) pathways commonly focuses on predicate data or bridging strategies to accelerate FDA approval but lacks dialogue on the needs of US payers. This often leads to a major disconnect at the time of launch. The 505(b)(2) developer may expect broader access and lower patient out of pocket cost (copay) than the payer is willing to give. 

Recently, we convened a panel of national payer pharmacy decision-makers to ask them about how they evaluate 505(b)(2)s and whether an approved FDA label is enough to secure strong payer market access.  

This blog is the first installment in a series summarizing our findings. 

De-mystifying the payer evaluation process of 505(b)(2)s

A drug developer’s 505(b)(2) product is approved by FDA. With label, product dossier, and a collection of supporting clinical papers in hand, the drug developer engages payers on formulary coverage which is often met with:  

• A request to return in 6 months. Some payers will ask the drug developer to come back when it is time to review the therapeutic category, often in 6 months, or worse, after the developer has a years’ worth of market experience. 

• Non-preferred coverage. Other payers will cover the drug as a non-preferred product with a combined high rebate and out of pocket patient cost.  

• No coverage. Some payers will not cover the product at all.  

This process can take upwards to 18 months to secure reasonable payer coverage. 

Improving the probability of success

When asked about a better way to approach market access, our payer panel recommended understanding the payer evaluation process first. 

The process starts broad and then narrows. It begins by answering the key question, “What is the value of the product?” This question is not meant to be a philosophical navel gaze but rather a broad-based question to frame the fundamental premise of the product as it relates to patient care.  

Payers first examine the 505(b)(2) product’s FDA approval documentation. Keep in mind FDA approval does not serve as the basis for payer coverage. This is standard formulary policy language. Payers will examine the indication, clinical study design, clinical data, safety data, and dosing/administration. The goal of this step is to structure an initial hypothesis on how the product addresses the core question of value.  

Payers will use the product’s FDA approval to understand the strengths and weaknesses of the clinical data, the paucity of the safety data, and how the dosing/administration align with real-world use. Big picture. They want to know what unmet medical need or problem the 505(b)(2) product will solve and whether it is better than the original. 

After the review of the FDA approval, the aperture narrows. While each product and therapeutic category is unique there are a core set of reviewed attributes. See below. The list is meant to be representative but not exhaustive.  

Efficacy

• What is the efficacy of the 505(b)(2) compared to the original? Is it better and clinically meaningful?  

• Is the improvement to the original product clinically necessary or appropriate?  

• Are there any red flags with the prospective trials? 

Safety

• What is the safety profile of the original product versus the 505(b)(2)?  

• What are the differences between the original and the 505(b)(2)?  

• Are there any new safety issues to consider? 

Dosing and administration

• What is the daily dose? If the dose has changed, what patient population benefits and is it clinically necessary or needed?  

• Is the 505(b)(2) easier to use versus the original product?  

• What is the duration of the therapy, and does it require special administration or monitoring? 

Uniqueness of the product

• Is the market completely genericized or are there brands?  

• Does the 505(b)(2) provide a step-change in care? If so, is it incremental and does it eliminate the need or use of other products or interventions?  

• How differentiated is the product versus other products in the therapeutic category?  

• What is the volume of use of the original product and how does it compare to competition in the category? If low, why is the 505(b)(2) better than original?  

Target population/place in therapy

• Who is the target patient population and is it different than the original product?  

• Is the product intended for a broad population or segment? 

• Where does it fit in treatment and how long is it used? 

Cost impact

• What is the impact on the cost of care?  

• If the category is genericized, why is the increased cost of the 505(b)(2) needed?  

• Is the 505(b)(2) priced reasonably? 

Early planning: The key to success

Achieving FDA approval on a 505(b)(2) product is a significant milestone. But this is only a step on the path to launching a successful product. While payers are not the only end customer, they have a tremendous impact on adoption by HCPs and patients. For 505(b)(2) developers, it is important to factor in the needs of the payer at the pre-IND stage. Consider the questions above as a starting point, not an ending. 

The next post in our series will provide an overview of the factors that influence payer decision-making. It will go beyond the review of product-specific data to explore factors such as therapeutic category situation, medial claims data, and budget impact.  

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Premier Consulting’s commercial experts bring extensive experience with helping 505(b)(2) drug developers maximize their asset’s market potential. If you are seeking support with defining, planning, and navigating the development process, contact us here. 

Author:

William Bainbridge, Sr. Director, Commercial Strategy Solutions