Challenges and opportunities in the drug space

The drug space is experiencing significant changes, including the introduction of high-cost cell and gene therapies and new competition in weight-loss drugs, Peroutky and Bakst said.

Meanwhile, policy pressure from both Republicans and Democrats is driving legislative and regulatory change, including pieces of legislation like the Inflation Reduction Act and other pharmacy benefit manager reform bills. These pieces of legislation are efforts to address drug costs by the government but are unlikely to solve the problem entirely.

Currently, drug development innovation is outpacing the implementation of regulatory changes, making it challenging to control spending. "Every time the government tackles one thing, we're still innovating faster than those changes can be implemented, and we're still aging faster than we can control the spend," Peroutky said.

According to Peroutky and Bakst, purchasers and payers need to prepare for a new era of drugs and consider the opportunities presented by increased competition and outcomes-based contracting.

Preparing for the new era of drugs

Purchasers need to be ready to spend significant amounts of money on high-cost drugs and explore solutions beyond price, such as building capabilities for managing utilization and leveraging demand, according to Peroutky and Bakst.

Providers can experiment with new payment models and build revenue streams or service lines around high-cost drugs, focusing on disease-specific care and integrating existing resources.

Meanwhile, payers should consider partnership strategies and patient steerage, collaborating with centers of excellence to ensure appropriate coverage and management of high-cost drugs.

Experimentation and innovation

Experimentation is crucial in navigating the new era of drugs and finding sustainable solutions. "Experimentation is a sister word, in my mind, for innovation," Peroutky said.

Experimentation may vary depending on the specific drug and market, but all stakeholders should be open to taking risks and adapting to change.

Meanwhile, innovation should prioritize health equity and consider the larger impact beyond cost. Providers and payers can leverage existing infrastructure and strengths to meet new challenges. "You don't need to reinvent the wheel to meet new challenges," Bakst said.

The pharmaceutical market is experiencing significant shifts, and you need to be prepared. Explore the major trends shaping the industry, including the rise of high-cost drugs and the impact of changing policies, and find out what they mean for your organization.