Short-term affordability challenge
Healthcare systems and insurers have grown accustomed to a ‘pay as you go’ system for the treatment of long-term illness and are not geared to meet the very high upfront costs of once-off or short-term treatments with long-term benefits. There is often a short-term affordability challenge. While payers may have the resources to pay over time, front-loading the costs with significant uncertainty and risk that the associated treatments will not deliver benefit poses an often unsurmountable hurdle to funding. In summary, payers are often unwilling to take a risk and pay upfront for “potential” value.
The situation is further complicated by the relative lack of evidence for those long-term benefits. Many gene therapies have been approved on the basis of relatively short-term and small clinical trials involving just a few hundred patients or less. Regulators may approve them based on benefit-risk assessment. However, payers may not be willing to take the financial risk on a product with unproven long-term benefits.
An example of how this can lead to commercial failure is Glybera (Alipogene tiparvovec), a therapy designed to reverse a condition causing severe chronic pancreatitis. Despite being approved and launched in the US market at a price of $1 million per patient, it was subsequently withdrawn having only ever been administered to one patient. In Europe, it never even made it as far as commercial launch at all as the health technology assessment agencies in both France and Germany did not recognise its long-term benefits.
One of the issues at play here is the fact that assessment bodies are not set up to evaluate wider system and societal benefits, such as savings on avoiding future treatments and procedures that would no longer be necessary, and improvements to patient quality of life and productivity.
Stakeholders in the ecosystem have proposed solutions to many of these challenges, and are devising new contracting arrangements aimed to deliver value-based pricing along with innovative payment structures. These include outcomes-based payments, which are linked to the clinical benefits of the therapy and the actual economic savings it delivers over time. These arrangements can also include a rebate mechanism where the payer has refunded all or part of the payment made earlier in the contract if specified target health outcomes are not realised.
Such arrangements have the beauty of obviating the need for a large upfront payment while linking long-term payments to the efficacy and durability of the therapy. However, they are not easy to design or implement. Agreement must be reached on the metrics and there need to be measures in place to monitor mechanisms and data collection infrastructure that both sides can trust.
Furthermore, there is additional complexity due to the fact that different jurisdictions have different approaches to evaluating the potential value and benefits of medicines, have their own price-setting and payment regimes, and have legal frameworks which need to be taken into account when dealing with highly sensitive personal data.
In addition, a number of countries have yet to establish the functioning national digital health record systems which will likely be required to support the monitoring and outcome data collection mechanisms required by these new contracting arrangements.
Value-based digital tools to overcome payer, health system hurdles
The issues are not insurmountable, however. Solutions¹ can be found and co-created if manufacturers, payers and regulators come together to collaborate with other stakeholders in the ecosystem to enable broad and equitable access for existing cell and gene therapies, as well as the large number of new ones that are expected to come to the market in the coming years.
There are a series of resources and tools that can support cell and gene therapy manufacturers, suppliers and payers to design, develop and implement their value-based contracts at scale. This can be done through a digital one-stop-shop of enablers including:
- Health Outcomes Platform: This innovative, industry-wide utility is designed to facilitate value-based contracting at scale by maintaining data ownership, data security and patient confidentiality by never moving data from its source. The solution automates the contract management so contracting is seamless, frictionless and fluid and requires minimal manual intervention.
- Value-based Contracting Revenue Simulator: Allows users to run a variety of different value-based contracting scenarios to simulate revenue and identify risks, with a universe of contracting possibilities available. This enables projected contract performance to be compared, providing insights into which strategies perform best in different scenarios.
- Value-based Contracting Toolkit: Incorporates key learnings and validated frameworks from real-world experiences to provide clear and actionable advice for each step in the contracting process - from strategy and design through to implementation. While the tool can be market agnostic, it can be tailored for specific brands and markets, with relevant case studies, implementation plan guides, and payer insights.
- Value-based Contracting Landscape Assessment Tool: Offers a structured framework for the identification of markets where value-based contracting might be feasible. It allows users to prioritise markets best suited to value-based contracting for different products and provides recommendations on suitable contract types, payers to target, and the contract negotiation and implementation process.
- Value-based Contracting Prioritisation Tool: Allows users to identify optimal contract mechanisms for a specific product in any given market. The Value-based Contracting Revenue Simulator validates the choice made by simulating contracts for products in different markets based on a variety of financial and/or performance-based mechanisms, with the ability to accommodate for complex product characteristics.
- Value-based Contracting Tracker: It’s a repository of all of an organisation’s contracts and facilitates key metrics tracking. Dynamic dashboards provide a global and local view of contracts across all therapy areas for all products, with the ability to filter data based on specific needs. It also facilitates sharing best practices learnings across organisations, helping to identify the most effective strategy for each product, therapeutic area, and market. In addition, contract performance can be compared to enable insights into which strategies perform best in different scenarios.