Structural Leverage in Market Access Negotiations
Part 3 of the series “Why I’m Bullish on European Market Access”
Over the last couple of weeks I’ve shared that I’m hopeful about market access in Europe because of policy changes and changes to the social contract that provide an opening to innovations in the work of market access.
Today I want to explore how the leverage in these access negotiations is changing, and why that is encouraging.
From a pharma or healthcare point of view, market access negotiations can seem fairly academic. When you’re a patient, however, the stakes can be life or death. Failure to reach a negotiated agreement carries catastrophic consequences. Given this backdrop, emotions around access negotiations are intense. Appropriately deploying leverage in these fraught negotiations can be tricky.
I’ve had a number of recent conversations with market access leaders at pharma and payers who describe the significant, and in many cases heightening, challenges of market access in Europe. The gridlock is in some ways appearing more severe than ever. But I’m confident that some of these impasses will actually lead to increase access. Let me explain:
From positional to structural leverage
Market access negotiations have traditionally been around what I’ll call “positional leverage.” Parties involved can choose where to stand firm and where to give in. For instance:
- A big company with the resources to launch in a market, but for whom a deal might mess up pricing in other markets, may choose to stand firm in negotiations or to flex.
- A payer may or may not choose to pay for an expensive treatment because of how it would affect their ability to reimburse other interventions.
There’s now a different kind of leverage we’re seeing in access negotiations and dialogue driven in large part by the science of medicine and how drugs are being discovered. I will call this “structural leverage.” This is leverage in a negotiation where the element of choice is diminished. A set of “structural” rather than “positional” constraints demands empathy and joint problem solving between pharma and payers. Consider the following:
- A small biotech company that recently discovered a life-changing therapy does not have the millions of dollars and years of funding to file for access across all the different health systems in Europe, many of whom involve negotiations with multiple payers. With such limited resources, they have no choice but to forgo launching in Europe and only launch in the US where access can be achieved faster and at higher price.
- A payer who would be willing to pay substantially for a potential disease cure if the evidence plays out. But without the long-term evidence today, they need to do an outcome-based contract to bridge the time divide between evidence and access and manage the budgetary risk of the treatment not working in which case they would have to pay for other interventions. Nevertheless, with a large potential patient population, they have no infrastructure to actually track every single patient given their small administrative team.
In it together
As we move from positional leverage to structural leverage, these kinds of quandaries become an opportunity for empathy, and collaborative problem solving. The increasingly stark challenges in market access are thus becoming a forcing function for payers and pharma to work together to create outside-the box solutions to the structural issues in market access.
This willingness to collaborate on solutions is necessary — but not sufficient. In the coming days I’ll be sharing about how technology can be a catalyst to further support this increasing empathy, making access and systemic transformation move from theory and intention to practice. More soon…