Developing manufacturer bid strategy including Maximum Fair Price modeling in Part D

Situation

A pharmaceutical client wanted to estimate the impact of different rebate and pricing scenarios on net plan liability for their target products relative to competitors. This would help inform potential contracting strategy and understand potential decisions that plan customers may make based on the impact of the Inflation Reduction Act (IRA) on the Part D market.

Solution

• Avalere Health used 2020 Part D claims data to model stakeholder impact pre- and post-IRA Part D reforms (2025-2030) for five drugs across the top six Part D sponsors (by enrollment) and plan type. ​
• Next, Avalere Health calculated stakeholder costs for each product and plan type both pre-IRA and post-IRA, with Maximum Fair Price (MFP) scenarios. Costs calculated included manufacturer discount liability, net manufacturer revenue, net plan costs, and patient out-of-pocket costs.​
• Finally, Avalere Health developed an input-based excel tool to estimate post-IRA impact under various plan management scenarios and held a workshop to wargame actions and strategies by functional area.​

Success

Avalere Health’s analysis helped to inform client Part D plan engagement, contracting strategy, pricing, and policy considerations manufacturers may need to shift to succeed in post-IRA environment.​