New Product Planning Strategies for Pharma and Biotech Post Inflation Reduction Act

Finessing Pharma and Biotech Product Strategies in the Post-Inflation Reduction Act Era

The recent passage of the Inflation Reduction Act (IRA) introduces sweeping changes for the biopharmaceutical industry through new drug pricing and negotiation policies. As key strategists for pipeline assets, new product planning (NPP) teams in the pharma and biotech companies need to understand the implications across their portfolio and product lifecycles. This article examines the critical considerations and proactive strategies for new product planners given the new policy environment.

Key provisions like drug price negotiations, inflation rebates, and Medicare redesign will require adapting existing playbooks for indication selection, target product profiles, lifecycle management, and launch planning. By taking a holistic view and making evidence-based decisions, new product planners can optimize assets despite pricing pressure due to legislative changes.

Adjust Pipeline Strategies & Portfolios in New Product Planning

The Inflation Reduction Act creates a new decision-making landscape for pipeline management and strategic portfolio planning. Pharma’s New product planning teams need to take a fresh look at upcoming assets and re-evaluate indication selection and sequencing strategies in light of the new mandates around price negotiations and inflationary rebates. Key considerations include:

• Evaluating pipelines with pricing simulations layered in to assess impact across assets based on factors like date of market entry, available exclusivities, and size of patient populations. This provides a holistic view of where price pressures may hit hardest.
• Rethinking indication selection criteria and choices based on new variables like the likelihood of price negotiation, availability of exclusivities, and extent of unmet need. For example, rare disease assets may be prioritized over highly prevalent conditions.
• Sequencing indications over the asset lifespan to optimize revenues accounting for negotiations. This may mean starting with rare disease indications before expanding to broader patient populations.
• Enhancing commercial insights and involvement earlier in pipeline decision-making to inform clinical development and regulatory strategies. Input on pricing impacts, analog analysis, and market access can shape asset potential.
• Evaluating out-licensing or sale of assets that face significant pricing risks under the new policies. Divesting select programs may be prudent based on updated valuation models.
• Incorporating inflationary rebates into commercial forecasts and revenue projections over the asset lifecycle and across portfolios. These will erode net pricing over time.
• Assessing opportunities to extend market exclusivity such as orphan indications, pediatric studies, or formulation enhancements to maximize revenues in light of pricing pressures.

The involvement of new product planning leaders in pipeline governance committees takes on heightened importance given the Inflation Reduction Act. Cross-functional teams need to align on asset valuations and portfolio strategy based on rigorous financial modeling and market access simulations factoring in the new mandates. This proactive planning can help biopharma companies navigate the pricing complexities ahead.

Developing Optimal Target Product Profiles Post Inflation Reduction Act

The mandate for drug price negotiations will require new product planners to rethink how they develop target product profiles (TPPs) and define competitive product positioning (based on rigorous competitor analysis). When pricing is predetermined via negotiations rather than based on clinical differentiation, the historical approach to TPPs needs to adapt. New product teams should:

• Factor in likely negotiated pricing and required inflationary rebates when defining the minimally acceptable and ideal TPP scenarios for an asset. This grounds profiles in new pricing realities.
• Evaluate potential TPPs through the lens of planned negotiating factors like budget impact and availability of alternatives. More modest profiles may fare better.
• Shift focus in TPPs from pricing claims to clinical differentiation relative to standard of care. Emphasize where possible unmet needs are addressed.
• Weigh heavily access and reimbursement scenarios when evaluating TPP options given low pricing leverage. Profile elements should align with payment priorities.
• Consider lower pricing analogs and generics as benchmarks when forecasting. Historical premium pricing assumptions may be invalidated.
• Conduct additional pricing sensitivity analysis on TPP scenarios to provide guardrails on negotiations. Test thresholds where value diminishes.
• Model TPP scenarios against budget impact limits which the HHS Secretary must consider. Profiles with lower short-term budget impact may prevail.
• Engage payers and negotiating committees early when evaluating TPP options to anticipate objections or restrictions for certain profiles.
• Determine where clinical trial investments should focus to support planned TPP claims and negotiations. Study targeted unmet needs and comparators.

The pricing restrictions of the Inflation Reduction Act make developing a winning TPP more dependent on evidence generation and stakeholder alignment. New product planners should proactively engage payer advisers, negotiating teams, and researchers to optimize clinical plans and profiles.

Adapting Lifecycle Management Plans Post Inflation Reduction Act

Lifecycle management planning takes on increased urgency and importance given the pricing pressures introduced by the Inflation Reduction Act. New product teams need to revisit LCM planning timelines and assumptions when exclusivity periods face mandated negotiations and inflationary rebates. Key focus areas for adapting lifecycle management plans:

The shortened runway for exclusivity introduced by mandated negotiations and rebates means new product teams need to take a broader view of sustaining asset value over the lifecycle. This requires innovative LCM planning and continuous pipeline replenishment.

Preparing for Drug Price Negotiations Post IRA

As price negotiating parties under the Inflation Reduction Act, new product planning teams need to ramp up capabilities ahead of mandated discounts. Key steps involve:

• Gathering required information on R&D costs, clinical comparisons, sales projections, and market data to support negotiations.
• Developing robust negotiation strategies and skills either internally or externally.
• Engaging closely with pricing, legal, and government affairs colleagues who lead negotiations.
• Building aligned negotiating positions across functions to optimize outcomes.
• Preparing leadership to convey investment risks and company priorities during negotiations.

Thorough preparation and alignment on negotiating positions will enable new product planners to help shape pricing outcomes in the new policy environment.

The Inflation Reduction Act creates an imperative for new product planning teams to revisit strategies across the asset lifecycle. By taking a holistic portfolio view, recalibrating TPPs, optimizing LCM plans, and preparing for negotiations, biopharma companies can sustain investments in innovation and patient value despite pricing headwinds. But this requires proactive planning and commercial foresight beginning early in development as well as throughout the development program.