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The new rules of cancer care: Responding to increasing CMS influence on the oncology landscape

Natasha Cowan, Senior Corporate Communications Manager | 9/30/2023

In this Q&A, policy and market access experts at Avalere (part of Avalere Health) explore the increasing influence of the Centers for Medicare & Medicaid Services on oncology product commercialization, revealing how the Inflation Reduction Act and Enhancing Oncology Model will impact manufacturers and advice for succeeding in this high-pressure environment.

During the past year, the Centers for Medicare & Medicaid Services (CMS) has sharpened its focus on oncology, introducing new policies designed to improve access to transformative therapies and drive better care for cancer patients. However, in developing these policies, the CMS is, in turn, introducing significant market disruption and increasing pricing pressure for manufacturers. How the biopharmaceutical industry responds to these changes today will have significant implications for the oncology products and portfolios of the future.

The most substantial legislative development impacting the pricing efforts of the CMS is the Inflation Reduction Act (IRA), signed into law in August 2022 by President Joe Biden to make innovative medicines more affordable, drive equity, and improve outcomes. The act includes a Medicare Part D redesign that caps out-of-pocket costs and shifts liability across stakeholders, including manufacturers, government, and Part D plans.

Under the IRA, manufacturers will be penalized if the price of Part B and Part D products rises faster than inflation. The federal Health and Human Services secretary has also been given the power to negotiate price changes with manufacturers on behalf of Medicare.

This negotiation process will accelerate the commercial life cycle—with small molecule drugs eligible for negotiation seven years after approval and biologics eligible for negotiation 11 years after approval, at which point revenue may decline pending negotiations.

Biopharmaceutical manufacturers are becoming increasingly anxious about what the IRA could mean for the rate of innovation, with biopharmaceutical CEOs warning of shifts in oncology drug development due to the downward implications on price.

The Enhancing Oncology Model (EOM) is another initiative anticipated to disrupt the oncology landscape. The EOM is scheduled to begin in July 2023 as the successor to the Oncology Care Model. It is a five-year voluntary payment model spanning seven cancer types: breast cancer, small intestine/colorectal cancer, lung cancer, prostate cancer, lymphoma, multiple myeloma, and chronic leukemia. The model is designed to maintain or improve quality and reduce costs with participating providers taking on financial and performance accountability, measured in six-month episodes of care.

Both the IRA and EOM are increasing pressure on biopharmaceutical manufacturers to drive down costs while increasing focus on improving care for patients. To succeed in this landscape will require manufacturers to rethink their approach to and execution of commercial strategy.

The team at Avalere (part of Fishawack Health) has significant experience supporting key stakeholders in oncology and hematology to generate cancer-specific insights and deep experience in navigating the implications of federal and state healthcare policy disruption. We recently spoke with their policy, evidence, strategy, and market access experts to understand how the IRA and EOM will impact manufacturers and to learn their recommendations for mitigating risk to drive success in this new landscape.

Why has Medicare advanced its focus on oncology products?

Amanda Tripp, PhD, Principal, Policy: Medicare is the largest payer in the United States and has always been a leader in setting healthcare policy. For the past decade, it has concentrated on value-based models. Now it is entering the next phase of identifying ways to make these models successful, including elective models like the EOM, through revisions to payment and reimbursement structures.

Melissa Morley, PhD, Principal, Policy: Medicare’s goal with the EOM is to save money while maintaining a high quality of care for patients. The framework incentivizes to provide high-quality care, including payments for the use of novel therapies. However, it is challenging to incentivize innovation and access to high-cost therapies within a model focused on driving payment down.


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