Insightful payer research helps client with an in-licensing decision

Background

The client sought a commercial understanding of the U.S. LHRH market with a particular focus on understanding the revenue potential for implantable products, in contrast with injectables. This insight would enable the client to make decisions regarding potential licensing opportunities in the category and development of an individual brand.

Key desired information included: (1) the rationale explaining current product share and market trends; (2) the role economics play in product selection; and (3) the effect that payer coverage/reimbursement would have on revenue potential for the implantable products.

Analysis

bioStrategies examined published payment data to detail the differences in payment amounts by private (commercial) and public (Medicare) payers, with an emphasis on Medicare as the predominant payer in this therapeutic category. In parallel, we conducted qualitative interviews with managed care organizations (payers), urologists and urology practice administrators to audit current coverage policies, reimbursement amounts, and views on the current and future economics for LHRH agonists. We demonstrated to the client that commercial reimbursement rates would decline in the future, as private payers planned to re-align payment amounts.

Our analysis showed that product choice for LHRH agonists was largely driven by: (1) economics due to perceived clinical equivalence and; (2) urologists were not brand loyal due to competitive pricing and margin opportunity. We determined that a minority product such as an implantable LHRH agonist would face increasing hurdles to grow market share in the face of downward pricing and reimbursement pressures, resulting in constraints on revenue growth potential.

Result

bioStrategies helped the client complete their due diligence on the licensing opportunity of the already-marketed product. With this detailed insight of the payer environment, the client decided to not pursue the investment and licensing opportunity.