By Tony Shi, Principal, Head of Digital Health & Access Innovation Strategy
If you’ve tuned into the news within the past few months, you’ll have seen Mark Cuban discussing his plans to lower pharmacy drug costs for patients. His namesake pharmacy, Mark Cuban Cost Plus Drug Company (MCCPDC), aims to manufacture and deliver low-cost therapies at a flat, transparent 15% markup plus a pharmacist fee. From digital pharmacies to other methods of virtual care, the healthcare experience is undergoing a rapid transformation. While care delivery models are still evolving, they bring new opportunities for pharma to increase value to patients.
Online Pharmacies: Highlighting Drug Cost Complexity
Cuban’s pharmacy model shines a light on the opaque PBM rebate and formulary management practices, calling for reform and attempting to motivate employer benefit leaders to evaluate other PBM models which prioritize savings pass-through to patient members. This increased public discourse around PBMs has placed more attention on pharmaceutical drug pricing and access. Healthcare providers now recommend patients compare therapy prices across pharmacies via websites like GoodRx. Patients familiar with Cuban’s program are requesting their prescriptions to be filled through the Cost Plus network when out-of-pocket costs are too high at their usual CVS or Walgreens.
Interestingly, while both GoodRx & MCCPDC seek to lower pharmacy costs for patients, MCCPDC’s pharmacy network is not available on the GoodRx platform. GoodRx reflects prices for their pharmacy partners who are PBM network pharmacies with which GoodRx is able to negotiate PBM rates for their patient discount cards. Since Cuban aims to delink pharmacy reimbursement from PBM rebates, this would negatively impact companies like GoodRx’s ability to arbitrage PBM rates for their program. The juxtaposition of these two models showcases companies like GoodRx who are operating within the current PBM model to provide enhanced value to patients, and those emerging with the intention to disrupt the current model.
Mark Cuban is not alone in seeking to introduce new pharmacy solutions to the market – cash and digital pharmacies have grown rapidly, offering low-cost generics and select branded therapies via direct pharmaceutical manufacturer negotiations, cutting out the PBM middlemen. These digital pharmacies provide patients with access to affordable therapy options in chronic conditions like diabetes and cardiovascular disease, as well as lifestyle medications for erectile dysfunction, hair loss, and oral contraceptives.
Digital Care Addresses Market Unmet Needs
As with the proliferation of digital pharmacies, physician care is also becoming increasingly digitized. We’ve seen a sharp rise in virtual provider networks, as the COVID-19 pandemic demonstrated the viability of such models. Chronic disease and specialty care patients can access remote networks of physicians to diagnose, treat, and manage care all without leaving their home. In digestive health, where wait times to see an in-person GI specialist may exceed two months, it’s no surprise that IBS and IBD patients are attracted to companies like Oshi Health, which delivers on-demand virtual care to coordinate labs and deliver diagnoses and much needed treatment. These models go beyond addressing patient convenience, and along with comprehensive care coordination can lead to improvements in patients’ overall health outcomes.
Manufacturer Direct-to-Patient Pilots are Growing
Patients haven’t been the only stakeholders interested in virtual care models. Pharmaceutical manufacturers have been increasingly trying to understand how to integrate digital care into their patients’ journeys and leverage the notion of on-demand medicine via the integration of virtual care and digital pharmacies to streamline access to therapy and enhance patient experience, with early iterations of this model emerging during the pandemic.
Specialty-lite migraine medications have been collaborating with virtual care providers since 2020. Biohaven partnered with migraine virtual care provider Cove to deliver telemedicine consultation, therapy prescribing, and shipment of Nurtec ODT to patients’ homes. Nurtec then expanded its virtual care network to include Nurx, and post-Pfizer acquisition has transitioned to Populus as its exclusive virtual care partner. Other brands that partnered with Cove during the pandemic include Amgen’s Aimovig & Eli Lilly’s Emgality, whose programs allow patients to access telemedicine services directly from their brand websites (while Cove supports Emgality prescribing, it currently does not offer prescription fulfillment or patient home delivery).
Pfizer’s 2013 partnership with CVS is a pre-pandemic example of direct-to-patient access. Before CVS removed Viagra from its formularies, patients with a prescription for the drug could order directly from CVS through Viagra.com to alleviate counterfeit online pharmacy sales.
The direct-to-patient model gained significant market attention this year when Lilly announced its “LillyDirect” program to support patient access to its much sought after GLP-1, Zepbound. By leveraging learnings from their Emgality–Cove program, LillyDirect patients seeking obesity treatment can schedule a virtual care visit with a weight loss specialist from telemedicine partner Form Health, obtain a prescription, and have their medication shipped to their home via digital pharmacies TruePill and Amazon Pharmacy. Integrated benefit support allows for streamlined determination of patient out-of-pocket costs, where patients with commercial insurance and coverage for Zepbound would only pay $25 via Lilly’s copay card. If a patient’s commercial insurance excludes coverage for Zepbound, they may still access the therapy at a cash price of $550 for the month’s supply, effectively circumventing PBM/payer management restrictions.
Direct-to-Patient Activation: Opportunities and Risks
Lilly isn’t the first manufacturer seeking to enhance its patients’ experience by leveraging digital care, and it certainly won’t be the last. While this model has proven successful for Lilly (at the time of this writing, Amazon Pharmacy is out of stock for all dosages of Zepbound), other manufacturers seek to understand the opportunities that the digital care channel may bring to their brands.
To better understand the opportunities and risks involved with the direct-to-patient model, the pharma industry should consider:
- The implications on PBM rebate contracting and utilization management for individual brands and broader portfolios
- Traditional brick-and-mortar provider perceptions and prescribing behavior for brands that are offered through digital pharmacies
- Differences in digital pharmacy models and how to integrate them into a digital care program (MCCPDC, Amazon, TruePill, Blink Health)
- Therapeutic areas which may be better suited for virtual vs. in-person care
- Manufacturer gross-to-net implications of offering a patient “cash price” relative to other price concessions, e.g., PBM rebates and HCP contracting
- Potential for care fragmentation and care coordination challenges
What’s on the Horizon?
We are just beginning to see the digitization of healthcare and where change will likely emerge within pockets of the healthcare system. While hospitals still fumble with fax machines, virtual care models have an opportunity to disrupt and streamline the patient experience. AI and machine learning will undoubtedly play a part in this conversation as tools to help scale virtual HCP care, or potentially replace some entirely. The impact of these models on the care delivery system are only now emerging – new questions will arise, and with it, new opportunities to deliver value to patients.
Contact us to find out how The Dedham Group can help you develop your digital care strategy and navigate the rapidly evolving landscape of virtual care.
