A Conversation With Luke Greenwalt, MBA

Luke Greenwalt, MBA

Greenwalt speaks frequently at conferences and is one of the leading analysts of market conditions for pharmaceuticals. He spoke with Peter Wehrwein, managing editor of Managed Healthcare Executive.

This transcript has been edited for clarity and length.

I took a look at your LinkedIn. I’d guess you’ve been in the industry for about 20 years.

I started at J&J [Johnson & Johnson] 25 years ago. The first third of my career was in sales. So I was a rep, going in and out of the office, carried a bag, and was an area manager for a few years. And then I went inside, at Allergan at the time, and joined the marketing team. So I launched a couple of products, managed some inline products, managed portfolios toward a loss of exclusivity. And then about 10 years ago, I came over to IQVIA to the market access team. So over my career, I’ve spent about a third in sales, a third in marketing and a third in market access.

If there’s a hat that you can have on when you’re commercializing a product, I have had it on at one point or another.

So you seem to be a numbers guy. Were you one of these kids who played with numbers, read the box scores?

I’ve been an avid baseball fan, yes. Probably no surprise. I’ve always been attracted to statistics and trying to understand how and why things work. I was fortunate enough when I got into pharmaceuticals that without knowing it, there’s a huge analytic undercurrent that fuels this business. So being able to make sense of all this information — it’s complex, it’s difficult — that analytic background and the nerd in me likes this stuff.

What’s your baseball team?

I am a Chicago Cubs fan. I grew up in the Midwest, a diehard Cubs fan. We watched through all the good years and all the bad years, and I very thoroughly enjoyed the World Series when they won it a few years ago.

What exactly is your job at IQVIA? I’ve heard you give presentations. But if somebody asked me exactly what is in your portfolio, I’m not sure whether I could describe it.

I lead IQVIA’s market access team. We work broadly across the industry. Last year, we worked with over 200 manufacturers. Basically, if they have a product in the U.S. market or coming to the U.S. market, we are engaged with them. Internationally, we’re working with companies from all over the world.

Part of the challenges of bringing a product into the U.S. is that there are a lot of different gateways that you have to work through.

The first one is access. If you don’t have access, you’re not going to be able to find success in the U.S. market, and that’s becoming really elusive. So our teams, broadly, are helping clients understand the U.S. market, what’s the path for a product to come into the market from a reimbursement perspective, and we’ll look at all kinds of analytics to help us understand that.

And then we also have teams that manage contract operations and, kind of behind the scenes, the revenue management side of the business. So for anything that has to deal with clients’ P&L [profit and loss] or gross to net, we have teams that are deeply versed in the means to manage these products and how those interplay with brand success and some of the challenges that come along with access.

We do more, but that’s, in a nutshell, kind of what we do.

What trends are you seeing in access? You’ve spoken about access becoming more difficult, and the window for return on investment getting smaller.

Launch access today is harder to attain than it’s ever been before. We see more products launching, and it’s taking longer to gain any access, if they’re able to gain access at all.

Add to that the challenges of margin compression through growing rebates and growing discounts, things like the 340B [drug pricing] program or patient service programs, which are increasingly expensive … [they are] lowering the ceiling a little bit of a brand’s potential in the market.

The third piece of this is the Inflation Reduction Act, adding in maximum fair price negotiations for Medicare at nine years for a small molecule and 13 years for a large molecule drug.

Those three pieces together essentially shrink the economic lifespan of a product. That’s challenging. It changes a lot of the math and decision-making about bringing a product to market.

But if we know that, and we know that this is how this is going to play out over the next decade, it also allows us to think about the strategies that are going to be needed as a pharmaceutical manufacturer launching a product and finding success over the next decade.

You mentioned being able to launch faster. It’s often a question of investment, focus, and being willing to generate the evidence that the payers need to see in order to add it to formulary. But those questions start even prelaunch as a product is still in development, so that’s early in the product’s lifespan.

Beyond that, there are things like indication stacking and indication sequencing. There’s life cycle management, there’s net present value calculations, and mergers and acquisitions.

All kinds of elements get wrapped up in this question of that shrinking economic window.

Pharmacy benefit managers [PBMs] have been in the news a lot lately. Is it their market power — particularly that of the big three, CVS Caremark, Express Scripts, and Optum Rx — that is shrinking this window of economic return and making access more difficult?

I don’t know if there is any one party that is at most at fault in something like this. There are real challenges broadly in the healthcare system. You talk about margin compression for the pharmaceutical manufacturers, but the PBMs operate on low single-digit margins as well.

Finding the ability to manage a complex portfolio of products, having an added cost center as new things like the GLP-1s [glucagon-like peptide 1] come on the market, and we see more rare and orphan disease products come in.

Can you blame the PBM for wanting to manage the cost with formulary restrictions? You really can’t. That’s probably that’s why they exist in the first place.

I take your point that the window is narrower, but the pharmaceutical industry just doesn’t seem to be a hurting industry.

It’s always a question of performance versus expectation. If the expectations are not aligned to market reality, you can have overinvestment. One of the issues that happens in pharmaceuticals is that you have forecasts that are not playing out as a product comes into the market. If you’re a manufacturer and you’re investing hundreds of millions of dollars just in the promotional spend, and you’re not getting that level of return back, then it is really a question of how to balance those pieces out. Some of the work that we do helps with that.

What I’ve been beginning to wonder about GLP-1s is whether they’ve been overhyped. Do you see any evidence of the predictions of wide adoption and then swamping payer budgets, that maybe this isn’t coming to pass? There are various studies showing that people come off them at a fairly high rate. Is there a bubble that is about to burst here?

I think we’re at the very beginning of really understanding what it means to have obesity treatments in the market that are truly effective. These products work. But there are questions with regard to on-label and off-label utilization, cosmetic utilization, disconnects between when weight is being lost versus the health benefit being experienced by the patient maybe a decade or more later. We’re just at the very early stages of working this out.

Long term, though, we know that patients with obesity over their lifetimes have more comorbidities, are more likely to have diabetes, are more likely have cardiovascular challenges, renal challenges, chronic pain, osteoarthritis, sleep apnea — the list goes on.

The need to treat this patient population, and treat it very seriously as a leading indicator and a leading cause for developing these comorbidities later in life, it’s really important. It’s a societal question. I don’t think it’s overhyped. I think, if anything, we’re just beginning to learn what it means to treat these diseases.

Add to that the deep, deep, deep pipeline of products getting ready to come into the market. At IQVIA, right now we’re tracking almost
180 different molecules for the treatment of obesity or obesity-related diseases that are in some form of phase 1 through 3 clinical development. Even if only a fraction of those is successful in coming into the market, we’re going from a couple of products today to 10, 12, 15 products in the near future. And that is also going to have an effect because net prices will come down, it will be easier for payers to afford, and you’re going to have more strategic decision-making by these different players as they’re trying to find niches in the market to find success. It’s got a long way to go to play out. We’re watching it very closely.

There’s a land rush going on, right?

Exactly. Eli Lilly and Novo Nordisk, they’re in the lead right now, for sure. These products had a major impact on the market capitalization of both organizations. Lilly went on to be the number-one valued company in the life sciences industry, and Novo, number two, jumping past J&J.

The major trend that I see is that the biosimilar market seems to be actually maturing. There was a lot of angst about patient reluctance and physicians being wary. But biosimilars are supposed to have the effect on biologics that generics had on small molecule drugs. Look at what happened with statins. The generics drove down price and made them a cheap medicine, right? Do you see that happening with the biosimilars? Are the copycats working?

That is a complex question. It depends on how you measure success. If you’re in a biosimilar manufacturer, you’re going to measure success by volume moving to your product. If you’re the payer, you’re going to measure success by net prices coming down. Those two aren’t necessarily compatible. Look at what happened with Humira last year. There were 12 biosimilars that launched throughout the year; most of those happened right in the middle of the year. At the end of 2023, Humira, as the brand name, held 98% of the market share, despite 12 being in the market and some of these products having discounts of up to 85%. What did they [AbbVie, the manufacturer of Humira] do? They contracted. They gave deep discounts on Humira so the net prices came down, and they came down to the point where it didn’t make sense for the PBM or the payers to move patients away from the branded product to the biosimilar.

That changed in April of this year when you had CVS partner with an in-house manufacturer, which essentially changed the business model, to bring the white-label version of Humira into the market. Then we began to see adoption happen.

But there are a lot of questions behind that. If you’re a biosimilar manufacturer it costs you, on average, about $100 million in research and development [R&D] to bring one of these products into the market. It’s an awful lot of money. We had 12 of those last year. So let’s say it’s $1 billion of R&D that was done. They only got to 2% market share. There are many, many manufacturers that are not going to shake out in the win column on this. And that’s going to beg this question over time: Are we going to see the biosimilar manufacturers continue to invest in this space?

What would be the policy fix, exactly? Because if the goal was to reduce spend on biologics, that’s accomplished because Humira is steeply discounted.

I’m not sure what the answer is yet. I think part of it is finding ways to encourage the research and development into these products. Are there accelerated pathways? What are you doing about interchangeability questions? Are there reimbursement models that may look different here in order to accelerate the adoption? CMS and the FDA are actively working through this and put out pieces earlier this year to encourage the earlier adoption of biosimilars.

Let’s talk about the Inflation Reduction Act, which, in terms of policy and law and regulation, may be one of the biggest things that’s happened in the pharmaceutical industry. But if you’re concerned about healthcare costs, and Medicare is the biggest payer out there, it seems like a positive development. The pushback on it, which really hasn’t grabbed hold because it seems so self-interested on the part of pharma, is that it’s going to take away the incentive to develop new drugs.

I’ll give you a good example on this one. Let’s look at Keytruda [pembrolizumab]. Keytruda is a massively successful product. It has 40 indications already and is approved in 95 countries. It is going to be eligible for maximum fair price negotiations in 2028.

Will we see another product like this in our lifetime that truly founded a class of medications? Millions of patients have been treated with this. There is $45 billion in clinical investment just into Keytruda alone. Or take it one step further than that, the amount of evidence-based medicine that is based on the targeting of PD-1 [programmed cell death-1]. If we don’t see this level of investment continue, what does that mean for products like this that are truly lifesaving products? And that’s a question that the system is going to take time to play out. We’re still going to see products launching.

We’re still going to see novel investments and innovations happening in the market. But there is this long-term question: Would we have seen the $45 billion in investment in Keytruda had we known that the patent life was essentially going to be truncated? I don’t know. That’s the real question.

I guess it’s all part of this window of return…

…that’s shrinking. If you have to bring value earlier in the life cycle, that also has trade-offs. So let’s say you stick with Keytruda. It has 40 indications — which have been stretched out over the last decade. If they had to move all of that earlier, to be able to get those same levels of indications, that’s a massive explosion in R&D cost. That R&D cost is coming from somewhere, right? Where does it get traded off from? Does it get traded off from profit? Sometimes. Does it get traded off from selling and administrative costs? Sometimes. Does it get traded off from other assets that may now drop in prioritization because we don’t hold the same amount of return on investment during that economic window? These are very real questions.

Is innovation going to zero? It’s not going to go to zero. Is this going to have an effect on the industry? Absolutely.

Won’t one response from the industry be just to come in at a higher price? If the period when you are going to make hay — sorry for the Midwestern reference — is going to be shorter, won’t you just come in at a higher price?

Then the question is, it’s not just one player doing it, it’s all players doing it as they come into the market — can the system afford all of those products coming in at a higher price?

Even at the prices products are launching at today, as we just talked about, access is difficult. If you come in at a higher price, the need to prove that value is also increasing. It’s a complex question. Are we launching price inflation? Maybe. Or does it go the other way: Do we see launch prices maybe come down to try to get access earlier so that you have a higher peak as you go through your life cycle? So it could go both directions. We model this in both directions for clients today.

Shifting gears, I have seen you and Doug Long* make your presentations. I’m curious, when you guys put together these slide decks — there’s something like 100 slides — do you make those slides yourselves? These presentations are kind of virtuosic.

I like to look at it like we’re putting a movie together with this big, [overarching] story that’s going through this, and it’s kind of a panoramic view of what’s happening. While both Doug and I help articulate the story, we have a lot of people who help us pull these pieces together. Some of the slides that make it into the presentation are ones that have come up through consulting engagements or ones that have come up through strategic conversations.

Doug Long, MBA, presenting at the 2024 Annual National PBMI Conference in September 2024.

What you see in the presentations that Doug does or that I do is really what’s bubbled up to the top as far as the hot issues, and we try to stay in front of that with our frequent client and stakeholder engagement. I love putting these together. It’s one of my favorite things.

Maybe you need credits like they show at the end of the movie — your version of the gaffers, key grips, best boys and the caterers.

Nobody knows it all in our industry. Nobody. It is too complex. There are too many parts. So we need to rely on other experts to help us pull these trends together. And then we help tell the story.