T

he next generation of cancer therapies will be like nothing we have ever seen before: a single infusion of immune cells that have been trained to thrive inside the body, recognizing and destroying cancer cells. It feels like science fiction, yet cellular and gene therapies are already real for some blood cancers. This year’s American Society of Clinical Oncology meeting in Chicago suggests that many more of them are to come.

And these therapies aren’t just for cancer. A single injection that addresses blindness in children has earned FDA approval. Medicines that can cure hepatitis C in less than two months are now so much a fabric of medicine that it is nearly impossible to remember when that disease was marked by the slow march toward a liver transplant.

The idea that we can give — over a course of days or weeks — a profoundly transformative medicine has radical implications for how we pay for therapies and create incentives for a new generation of cures.

advertisement

For years, innovation was driven by the understanding that the best we could do was develop interventions to keep symptoms at bay or, better yet, keep the underlying cause of a disease in check. The flip side of this is that chronic diseases require chronic therapy. That’s clearly not the ideal model: a one-time cure is far more preferable for patients.

But when a lifetime of benefit can be delivered in one fell swoop, it creates new challenges. As a society, we are not prepared to buy a lifetime of benefit all at once. We’re much better at amortizing that benefit over the course of dozens of years and hundreds of prescriptions.

A one-time treatment separates the cost of a medicine from its benefits. Cure a child with blindness today, and the benefits accrue markedly over time. However, given that the average American changes health insurers every few years, the insurance company that pays for the treatment is unlikely to cover the now healthier, less-expensive patient for an extended period of time. Even if the price is fair, there is a seeming inequity when the payer that foots most of the cost sees only a fraction of the associated savings.

We need to begin thinking creatively about this problem. At its broadest, solutions will focus on more closely linking payment for a curative therapy to the health benefits experienced over time. This is a deceptively devilish concept, easy to understand but hard to implement, even for traditional therapies. But there is no question that the only way we can deliver on the promise of the next generation of curative therapies will be to tackle this question head on. Ignoring the problem because it is difficult only makes the situation worse down the road.

Most current solutions are rooted in the notion that payment for a curative therapy should be spread out over time, even long after the therapy was administered. That’s not a radical concept. Home mortgages spread out a single, large purchase over time. Annuities offer another way to trade dollars spent in the future for dollars today. The idea would be to create contracts for curative therapies that extend over several years, with rebates and payments available based on the patient’s outcomes over time. The execution of such an effort is far from simple, however: houses age very differently than human bodies do.

Other proposals seek creative ways of making sure that the insurer paying for a cure receives something of value in return for that investment. Anirban Basu of the the University of Washington has suggested giving insurers that invest in cures a depreciating, tradeable “HealthCoin” that has a value commensurate with the cost of the treatment. In the event that a cured patient switches health plans, the new insurer would purchase the remaining value of the HealthCoin from the initial insurer, offsetting the up-front cost of the treatment. Right now, that’s more of a thought experiment than a viable, real-world approach, but it underscores the need to expand the way we think about these concepts.

To be sure, contracts designed around an annuity approach or HealthCoin won’t be the magic bullet that aligns incentives, but they do represent the kind of beyond-the-system thinking needed as we move to a world where tomorrow’s innovation looks different than yesterday’s breakthroughs.

This type of bold and creative thinking should also direct the way we act. Some people concerned with the financing of curative therapies have called for changes to federal rules to allow the makers of therapies to more easily communicate with those who will pay for them. It is also clear that we need more flexibility with other regulations, such as the Medicaid “best price” requirement that obliges drug companies to charge the Medicaid program the lowest price it has negotiated with other payers. By allowing for the possibility that drug companies will be paid a significantly reduced price as a result of one of these experimental payment models, such policies have been accused of discouraging the type of innovative financing that curative therapies require.

Those are only the first steps; more exotic payment approaches will require more than creativity from government, insurance companies, biopharmaceutical companies, and others. They will also require leadership.

At the American Society of Clinical Oncology meeting, it became clearer than ever that we are already living in in the “tomorrow” of biomedical research. We must now create the tomorrow of health care financing to account for these innovations.

Robert W. Dubois, M.D., is the executive vice president and chief science officer of the National Pharmaceutical Council, a health policy research organization supported by the nation’s major research-based biopharmaceutical companies.

Editor’s note: This article was updated to reflect the affiliation of Anirban Basu.

Leave a Comment

Please enter your name.
Please enter a comment.

  • And why was Universal HealthCare not one of your proposed solutions? An opportunity for the sole insurer to negotiate a fair price for treatment because they would offer it to anyone afflicted vs. only those “with coverage,” as well as continue to benefit from the health of the insured throughout their life sounds like a pretty elegant solution…don’t you think?

  • I think we need to move to solutions. You hit the head on the nail with the comment about beneficiaries changing health plans every few years. I have been speaking with mainly IDN based health plans for many years, because they are more coordinated in managing a patient and have common incentives with their physicians and that has been one of the ongoing discussions “if we pay upfront and the patient leaves in a few years, the life of the benefit isn’t seen to the health plan”. Maybe a depreciation type model could be developed or a cost/year to each health plan? Why can’t a plan pay industry a percentage every year? Another conversation I had with a CMO of a University ACO, was “we don’t object to industry having a profit, but how much of a profit? What is a fair market Value for a treatment?” I think some imaginative models can be developed, because there needs to be ongoing outcome measurement of a product also and maybe a registry?

  • This article seems to ignore a few very important points :

    A) insurance companies losing now-healthy folk will likely gain a share of other healthy folk (whose original insurer footed an expensive bill). Unless there is some bias in insurance selection (such as only one covering an expensive medication), you’d need to provide reason that the loss rate will putpace the gain rate of healthy individuals.

    B) nothing about these innovative therapies has required them to be outrageously expensive to fund. You have not made an argument that anyone should have to pay this cost over long periods of time (for example because a one time cost would be completely unaffordable) other than saying “it would be fair”. Fair to who? Does the same argument not apply to the penicillin that saved a child’s life from infection, or the OB who delivered a child in the first place?

    C) there’s some underlying argument here that drug companies won’t create such therapies because insurance companies cannot “appropriately” compensate them. Free market arguments would disagree (unless you could make a case that it would be so expensive to develop these treatments that no one would bc they would not be compensated). In addition, the examples you cite (I believe it’s harvoni that is the hep c cure) are in circulation and outrageously profitable.

    Convince me that your argument is not “drug companies won’t be able to continually milk patients of money and we should feel bad for them”.

Sign up for our Morning Rounds newsletter

Your daily dose of what’s new in health and medicine.

Privacy Policy