By Nathan Sigworth
Creative pricing models aimed at increasing patient access to innovative therapies have been kicking around for a while. But why have such approaches never scaled across the industry?
The fact that these approaches have not scaled across the industry is not due to a lack of great ideas. Rather, it is because pharma simply lacks the trading and settlement infrastructure of other industries. And in the absences of this “smart plumbing,” HTA and payer organizations in European countries, for instance, don’t have the personnel available to manually settle and account for dozens of complicated market access deals. But fear not, there are four reasons to be hopeful that we are going to see change in this area soon.
Pipelines are full of therapies with no good pathway to patients.
With combination oncology treatments, there is a need to manage both differential pricing for HTA compliance and the anti-collusion concerns that make collaboration on pricing difficult. With groundbreaking therapies that offer vastly different values across indications, new types of deals will be required that look different than what’s been done before. The vanguard is in Europe where HTA methodology results in specific challenges in pricing these therapies. A new infrastructure is needed to get these deals done at scale.
2. Political will
A newfound political will is one of the few silver linings of Covid-19: Operation Warp Speed, Covax have been remarkably successful and have come together quickly. Entire countries have implemented telemedicine services in days and weeks instead of months and years.
With a few exceptions, government officials, stakeholders, health care leaders are flexing their influence and realizing that great things can be accomplished through coordinated effort. I’m particularly proud watching my CCX Co-founder Richard Bergstrom and his colleagues in the EU and the Government of Sweden working to negotiate and allocate Covid Vaccines across Europe.
This bell can’t be unrung — patients and citizens have taken notice and now expect a faster pace in policy responses to innovation; that expectation will continue past the current pandemic.
Changes in drug pricing that increase access rely on being able to slice the market in a similar way the airline industry has. Think about how they’ve been able to fill every seat in the plane — by understanding and reacting to data in real time.
Data driven pricing is only as good as the source data and the secure infrastructure for handling that data. New approaches to real world data and genomics are being pioneered by companies like Aetion, Health Solutions, and IQVIA. Combined with the security of distributed ledger companies like Guardtime, Decentriq and Ederlabs, this new generation data ecosystem can supercharge the access agreements that payers, pharma, and providers have always dreamed of.
It’s a nascent industry, and as this new-generation data begins to be used to power market access, this will drive demand for more in a virtuous cycle that will drive innovation in clinical trials, pharmacovigilance and other areas of health care for decades to come.
This has already happened in Sweden where a negotiation of a Roche combination resulted in a major data project integrating health data to feed and replicate such deals.
Many leaders in market access are a bit jaded that there can ever be change. In some ways pharma is an outlier — a $1.2 trillion market operating in some therapeutic areas as low as 30% efficiency (to take one industry colleague’s estimate).
Other industries have solved these allocation issues. Could you rent out a house or apartment before Airbnb? Yes, but they sure made it a lot easier and accessible, growing the overall rental market. Codeshare among airlines meant that seats are almost always full and — when there’s not a global pandemic — you can almost always book a flight where you need to go in the class of service you want at a price that is acceptable.
Electronic trading takes place everywhere making markets efficient and rewarding innovation. The good news in market access is that the creativity — the hard part — is already there. Stakeholders simply need to work together to deploy what is essentially ‘standard’ fintech infrastructure. Early innovators in risk-sharing contracts, like TLV in Sweden, are again leading the charge toward new infrastructure to scale this creativity.
But it’s not just the design of this new infrastructure that can be borrowed from other industries — it’s the governance models as well. There is a roadmap from financial exchanges that transact trillions of dollars every day as to how to do this with the appropriate governance and controls in place.
The influence of finance in pharma is not universally positive. As Matthew Herper pointed out in an article in STAT late last year, the same economic forces that have given rise to rapid innovation have also contributed to some of the pricing challenges that we have today. But this is all the more reason to implement both the infrastructure and safeguards that the finance industry has already deployed to align incentives in these choppy waters of capitalism.
Change takes time. But as the industry works together to solve these systemic infrastructure challenges, there is hope of steady progress. There are different sides to each particular market access deal, but – despite public perception – most everyone got into this business to help patients. And with tools from the world of finance, that might soon get a lot easier.
About the Author
Nathan Sigworth is CEO of PharmaCCX — an independent, third-party technology platform working with payers and pharma to help increase patient access to promising therapies.