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Rethinking financial services in biopharma patient affordability programs

By Bob Raffo

Many patient affordability programs are managed by third-party vendors hired by biopharma companies. In addition to the critical support services these programs deliver to providers and patients, these vendors also manage the financial services – including the claims processing and funding account management – necessary to run these programs.

However, these vendors often lack the financial expertise, capabilities, and protections that could optimize these services – which is becoming increasingly important in today’s healthcare landscape. 

Patient affordability programs were initially designed to alleviate the burden of out-of-pocket costs caused by factors like tiered formulary design and high-deductible health plans. But now, with more high-cost, complex therapies – and with increased barriers to access and affordability – there is more reliance on these programs and new reasons to take a different approach to the financial services used by these programs.



Bob Raffo, Senior Vice President of Financial Services & Strategic Commercial Development at Cencora


Here are a couple of reasons to rethink how the financial services are managed in your patient affordability program.


To increase pull-through at point of dispense

Biopharma companies are focused on the development, commercialization, and distribution of their medication products. This focus ultimately prioritizes getting these products to patients who will benefit from the therapy.  

But in addition to the familiar obstacles of prior authorizations and step edits, there are new challenges at the pharmacy that are getting in the way of dispensing these medications to eligible patients.

Pharmacy benefits managers (PBMs) increasingly underpay pharmacies for certain medications. As a result, some reimbursements are lower than a pharmacy’s actual cost to purchase and dispense these medications.

The ripple effect for biopharma companies is that pharmacies may ask providers to switch patients to medications with higher reimbursements. In some cases, pharmacies may even abandon under-reimbursed medications altogether

Additionally, PBM use of formulary exclusion lists has significantly increased. From 2014 to 2022, the formulary exclusion lists for three of the largest PBMs went from having 109 to 1,156 unique products. These formulary exclusions deny a PBM’s member population coverage for medications, resulting in pharmacies encountering more and more insured-not-covered patients when those medications are prescribed.

Some biopharma companies have resorted to a consignment model to offer these insured-not-covered patients an out-of-pocket price that is more affordable than the usual, customary, and reasonable fee. But managing a consignment program with pharmacies poses significant challenges for biopharma. The inventory control and auditing needed to ensure a consignment stock is used appropriately is expensive and often inaccurate.


To mitigate regulatory concerns  

When a patient affordability program provides copay assistance, those payments are usually made to a provider for the product received by the patient. The final price rule in the CMS 2023 Physician Fee Schedule was vacated this past year, but the fact remains that CMS has made it clear that payments to providers that are not clearly identifiable as a patient benefit may impact best price or may be subject to The Sunshine Act.

The heightened risk of increased regulatory review of payments routed through patient affordability programs translates into potential new compliance challenges for biopharma companies. Companies may be subject to more stringent reporting of all payments related to patient benefits, especially buy-and-bill programs for drugs covered under medical benefit.  


To improve cash flow 

Initially, biopharma companies funded patient affordability programs at levels that allowed the companies to run the programs with minimal impact to their gross-to-net calculations. Benefit funding account management usually involves patient services vendors periodically invoicing biopharma companies to establish a prefunded account controlled by the patient services vendor and used to finance the copay benefit support. 

But the support of these programs – along with other barriers – has steadily increased to affect both gross-to-net and cash flow. The increasing spread between a drug’s list and net prices, described as the “gross-to-net bubble," is constraining cash flow for many biopharma companies. The overall cost of these rebates and discounts was an estimated $256 billion in 2022 and is projected to grow.

Patient copay and affordability programs constitute approximately 7% of the total bubble, equating to nearly $18 billion of patient benefit dollars that are prefunded typically between 45 to 60 days. This means biopharma cedes control of between $2 to $3 billion per month to patient services vendors that may be neither fiduciaries nor bank service businesses.

Furthermore, the way patient affordability programs are typically prefunded imposes additional cash flow constraints. Once funding is disbursed for a specific affordability program, it cannot easily be re-allocated to other programs. 


Rethinking financial services 

To address these challenges and provide the access and affordability support patients need, biopharma companies should seek out a financial services provider that specializes in patient affordability programs.

Not only will a financial services provider have the expertise to develop effective claims management and funds management solutions, but it will also have the licensing, institutional relationships, compliance protocols, and fiduciary responsibility to execute these services to the benefit of the biopharma company, patient, and provider.

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Learn more about how working with Cencora Financial Services can help increase pharmacy pull-through, execute more compliant programs, and improve cash flow.

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