With new, game-changing drugs hitting the market at 6-figure prices--and gene therapies expected to cost upward of $1 million--patients might complain they'd have to take out a mortgage to cover their costs.
Well, some influential researchers are proposing a mortgage-like market to cover healthcare expenses. They suggest opening up financing via loans and securitizing those loans for investors.
In an article in Science Translational Medicine (STM), researchers from the Massachusetts Institute of Technology, Dana-Farber Cancer Institute and the Broad Institute say patient loans could be designed to link payment to the clinical benefits of their treatment. In a way, they would be pay-for-performance deals--an idea now taking hold with Big Pharma in negotiations with payers--but at the patient level.
That sort of financing would give patients access to more treatments, "including expensive short-duration treatments that are curative," the article suggests: the new generation of pricey hepatitis C drugs, for instance, or, at the high end, gene therapies that can cure serious diseases and disorders, such as UniQure's ($QURE) Glybera, which treats a rare metabolic disorder, lipoprotein lipase deficiency. The treatment's benefits could last for a lifetime, but the almost-$1 million bill has to be covered up front.Dana-Farber's David Weinstock
With other gene therapies on their way--author David Weinstock of Dana-Farber, mentioned potential cures for amyotrophic lateral sclerosis and many cancers--that problem is only going to grow.
Coupling loan payments to treatment results could not only lower per-patient costs--by making sure that payments only apply to patients who get results--but also offer an incentive for drugmakers to focus on "transformative therapies rather than those that offer small incremental advances," such as "me-too" meds or slightly tweaked follow-ups to aging blockbusters.
Next comes the financial engineering part of the proposal: Packaging such loans together would help keep the financing coming. "Numerical simulations suggest that securitization is viable for a wide range of economic environments and cost parameters, allowing a much broader patient population to access transformative therapies while also aligning the interests of patients, payers, and the pharmaceutical industry," the authors figure.
This isn't the first proposal for new ways to pay for pricey drugs. With $1 million-plus gene therapies finally entering the market, James Wilson, a noted gene therapy researcher at the University of Pennsylvania, teamed up with CVS Health ($CVS) CMO Troyen Brennan in 2014 to suggest a capped annuity approach. It would be structured to link payments to performance as well: Annual payments would continue as long as treatments continued to work and as long as the therapy's patent remained in force.
The Science article authors see their idea as a win-win-win for all sides of the argument. One particular example: hepatitis C, where therapies from Gilead Sciences ($GILD), AbbVie ($ABBV), Merck ($MRK) and Bristol-Myers Squibb ($BMY) promise cures for almost all patients, but cost so much up front that many payers have been limiting access. Creative financing would spread the overall cost to society--which they estimate at $227 billion just in the U.S. and $15 trillion worldwide--giving the drugs a chance to save the healthcare system money down the line, by preventing transplants and other complications of hepatitis C.CVS Health CMO Troyen Brennan
Given that CVS' Brennan is open to creative financing for superpricey treatments, the idea might not be far-fetched. The pharmacy benefits manager and other payers might just get on board.
"This is an instance where financial engineering could benefit the entire ecosystem," said study co-author Andrew Lo, an MIT Sloan School professor (as quoted by Medical Xpress). "It helps patients by providing them with affordable access to therapeutic drugs and cures. It helps biopharmaceutical companies by enabling them to get paid back for the substantial investments in R&D they make to develop the therapies in the first place. And it helps insurance companies by linking payment to ongoing benefit."
That's not to say that financial engineering is an ideal solution to high drug costs and narrowed patient access, the authors note. They deliberately steered clear of entering the debate over biopharma's price-setting policies, but did say that other solutions would ultimately be better for everyone--namely a mandate that pricey therapies be covered and broader price-negotiation powers.
"We should note that a law mandating full coverage for curative therapies and allowing for price negotiation would likely be economically more efficient, more sustainable, and socially more acceptable than a purely private-sector solution," the STM articles states.
"However, in the current political atmosphere, patients fail to receive optimal care with each passing day, despite the fact that we have both the methods and the financial means to provide such care. In the interest of extending benefit as broadly and quickly as possible, we consider a practical solution that is available immediately."
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