Medicine’s Evolution Has Brought Novel New Products, Opportunities for Pharma
Therapeutic interventions have evolved from people taking a pill every day to treat a condition to the one-time cell and gene therapies aimed at halting disease progression or even curing a disease. The rise of these innovative new products means that payers need more information than ever in order to properly assess treatments, as well as compare them with existing methods of care. They also can benefit from collaborations with manufacturers, including on innovative pricing models.
“The science is moving at lightning speed, and what we thought was previously impossible has now become a reality with some of the newer gene therapies and other novel drug approvals,” observes Reta Mourad, Pharm.D., a senior director on the access experience team at PRECISIONvalue. “As we learn more about diseases and develop a deeper understanding down to the genetic and molecular level, we are able to see advances in therapies that were unheard of,” for example with chimeric antigen receptor T cell (CAR-T) therapies, the first of which were approved in 2017.
“Medicine today has evolved by leaps and bounds from what it was even a few decades ago. Starting off with small molecule drugs and vaccines, to biologics such as antibody treatments, the world has now evolved into complex therapeutic interventions whereby the genetic construct of an individual patient or the patient’s disease is being targeted to cure the disease,” point out Amit Agarwal and Brian Corvino, both managing directors at Deloitte Consulting LLP. “The world has moved from treating large homogenous populations where one would treat symptoms to triaging treatments based on the heterogeneity of populations.”
This new era of precision medicine was driven by the Human Genome Project, an almost 15-year effort completed in 2003 that mapped the DNA sequence of the human genome, state Agarwal and Corvino. “This allowed for targeting specific diseases in individual patients, based on the patient’s and diseases’ unique characteristics. Gene therapies, for example, take into the consideration the genetic makeup of the patient’s disease and, by means of genetic engineering, are able to correct underlying defects in the genome to control/prevent disease progression or, better still, to cure the disease altogether. Today, genetic engineering technologies, such as CRISPR, RNAi [i.e., RNA interference] or vector-mediated therapies, to name a few, have advanced to be extremely precise in their targeting mechanism while minimizing off-target toxicities and side effects.”
Jeff Stoll, KPMG’s U.S. life sciences strategy leader, notes that the drug pipeline is filling up with cell and gene therapies. “As of January 2020, 900 different gene therapy IND [i.e., Investigational New Drug] applications were submitted to the FDA, and the market is expected to grow to $62 billion by 2026. These therapies are a key part of the future of pharma.
“The potential to cure or create a functional cure of a disease is slowly becoming a real possibility with these new treatment modalities coming from cell and gene therapies,” he continues. “It will take time, but today many monogenic diseases have the potential to be cured through gene therapy. It is this promise that has motivated the pharmaceutical industry to invest heavily into these emerging areas.”
Each payer will have its own way of assessing the value of treatments that slow down diseases vs. silencing them vs. curing them, explains Stoll. “Broadly speaking, payers assess the clinical evidence of a treatment’s benefit to patients and the ability of that treatment to justify its health economic benefit. The specific endpoints for clinical effectiveness and safety for each class of therapy and disease area tend to be unique; however, when comparing a curative drug vs. a disease-modifying drug treating the same disease, they will try to consider similar qualities in order to determine which therapeutic provides the most health economic benefit.”
New Payment Models Are Needed
But while payers may have standard metrics to conduct value assessments, Agarwal and Corvino contend that the reimbursement models in use today “are antiquated and have not evolved as rapidly as the pace of scientific innovation. Many medicines today have advanced to models such as one-time cures or controlled disease management. As such, payers have been exploring a range of payment models based on the value imparted by these. Value assessment in itself is very different from financing for these diseases. Defining value entails quantifiable metrics such as financial-risk-based metrics and outcomes-based. However,…the measurement of value offered by treatments, in terms of slowing disease progression vs. curing the disease is yet to be determined.”
“Payers will always view a treatment from the lens of total cost of care,” maintains Mourad. “Does this therapy that either slows disease progression, halts progression or cures the disease ultimately lower the payer’s total cost of care? Does it provide patients with an option that doesn’t currently exist in the market? There has to be inherent value in a payer making the decision to pay for a treatment due to the sheer cost of many of these new drug therapies. If a drug is curative but costs upwards of hundreds of thousands of dollars, a payer will need to ensure that the data presented support their decisions as well as understand the potential cost mitigation that may occur by covering the drug vs. the cost of treatment and other medical expenses if the disease is not cured.”
Drugs Pose Opportunities, Challenges
New drugs that could be curative, particularly in rare diseases, oncology and other high-cost categories, “pose both opportunities and challenges” for payers, she tells AIS Health. On the one hand, they present new treatment options to patients “and could potentially offset extremely high, ongoing direct and indirect medical costs of treating these diseases with conventional or current therapy.” In addition to improved patient outcomes, say Agarwal and Corvino, these agents could “reduce wastage of drug products, minimize unnecessary medical procedures and treatment, and, therefore, decrease cost to members and payers.”
However, says Mourad, challenges exist around “being able to support coverage based on the available evidence. Many payers no longer rely just on FDA approval of a therapy as grounds for coverage and will look to guidelines from organizations such as the NCCN [i.e., National Comprehensive Cancer Network] and ICER [i.e. Institute for Clinical and Economic Review], as well as supplemental literature, in order to be able to make more thorough and holistic coverage decisions.”
Another challenge, add Agarwal and Corvino, “is that the financing and patient reimbursement models have not yet caught up with the scientific advancement.” Stoll agrees. To cover these all of these therapies, payers will need to develop “creative pricing structures,” he says.
The current and future treatment landscape presents both positive and negative aspects for manufacturers as well. On the plus side, “science is driving progress,” says Stoll. “We are in an era of significant innovation, and the global pharmaceutical pipeline has never been more robust than it is today.” He says that the speed at which COVID-19 vaccines have come to market “can potentially change a mindset toward developing new products. Beyond that, the technologies deployed to developing COVID-19 vaccines” — the first two on the U.S. market are messenger RNA (mRNA) vaccines — “could serve as a blueprint for vaccines to treat cancers and other conditions.”
However, he says, the products’ premium prices will mean continued “legislative pressure over pricing, in terms of both transparency and justifying price inflation.”
“The environment today embraces innovation,” Agarwal and Corvino tell AIS Health. “Regulators are more permissible to off-label and innovative uses of treatments, and payers have been more accepting of such innovations.” However, they point out that this trend is regional. “For example, the U.S. continues to accommodate these innovations in a value-based manner, where the health care ecosystem remains open to innovative, expensive medicines, but this is not the same in regions like India, where affordability of such expensive medicines is limited to a handful of those who can afford to pay out of pocket.”
According to Mourad, manufacturers that are developing novel therapies can draw the attention of key market access stakeholders. If a product is for a condition where there is unmet need, “the drug may be highly anticipated by many. Opportunities exist in developing proper messaging around new therapies and how these can impact our health care model from all perspectives.”
But, she says, as payers conduct close analyses of novel, new therapies, they are “looking for more than just pivotal trials in order to allow access. In addition, gone are the days when a coverage decision is made and is essentially permanent. These days, payers are looking for long-term data in order to maintain their existing policies and will often make changes to these policies in light of newly available data. Finding ways to collaborate with payers and other stakeholders is essential for manufacturers to assess early on in the development and study of their therapies.”
Drugmakers also can offer more innovative contracts, such as rebate-based agreements, advise Agarwal and Corvino. Or they could “price more effectively or establish certain value-based contracting models,” such as “only allowing payments by payers in cases where the product works or reimbursement [is] only for a defined population or different contracts for differential populations. Contracting, thus, can also be a mechanism that allows one to overcome budgeting limitations.”
They maintain that, particularly for high-cost innovative drugs whose value may be delayed, some “innovative coverage models” already are in use. “One popular model is the ‘outcome-based + rebate model,’ where a payer pays directly for the drug but receives refunds/rebates if the treatment is ineffective or wears off before a certain period of time. The other model is ‘outcomes-based + mortgage payments,’ where the payer makes a fixed upfront payment and then makes a few additional payments in installments at specified time periods based on the progression or regression of the disease. Other unique models have been built in close collaboration with the federal government for certain essential benefits (such as the COVID-19 vaccine). Additionally, payers have launched programs for rare gene therapies as an additional coverage that patients and employers can buy.”
Manufacturers, however, can provide “a whole host of data types” to payers in order for them to devise payment models, say Agarwal and Corvino. “This could include efficacy data from randomized clinical trials, real-world evidence, data from direct comparative studies and the insights from those studies to assist in guiding payers in effectively selecting the appropriate patients that can receive maximum benefits of the products. Leveraging insights from such data in a clearly articulated value-proposition highlighting positive budget impacts will be most impactful for payers to make payment model decisions.”
Stoll tells AIS Health that “many clinical studies and also post-marketing efforts gather data not only about safety” but also on medical outcomes, as well as some pharmacoeconomic data to provide pharmacy and therapeutics (P&T) committees with “more complete information to help structure their formularies.” With so many PBMs being part of health plans, he adds, “total cost of care will often weigh into the equation rather than strict unit cost pricing when it comes to medications.”
Clinical trials need to be properly designed, including “meaningful and clinically significant primary outcomes,” maintains Mourad. “Does the target population studied translate to patients that would be eligible for this treatment in the real world? If any outcomes are based on specific tests or labs, would providers have easy access to administering or ordering these in practice? If an outcome is statistically significant, does this actually translate to clinical and economic significance? Are we truly going to offset disease treatment costs by covering the drug in question? Does this treatment fill an unmet need in the treatment landscape? These are some of the key factors that payers are looking for when evaluating a therapy.”
Medicine Will Be ‘Hyper-Personalized’
As medicine continues to evolve, what can we expect to see?
Agarwal and Corvino say multiple trends are anticipated. “Precision medicine, for one, is predicted to become hyper-personalized, whereby you are developing a treatment for a disease, especially rare diseases, specifically tailored to an individual patient, rather than a host of patients with the same disease. Secondly, we can expect to see the use of technology, including wearables and real-world data, in helping monitor patients remotely and better predict outcomes. Lastly, getting a holistic picture of every patient’s health by including omics data, be it genomics, proteomics or metabolics, as well as environmental information, will lead to better customization of medicines.”
According to Stoll, “the knowledge being gained from genetics, biomarkers and in engineering is being deployed to improving medical care. We’re at a unique point in the innovation curve when it comes to using genetics to help personalize care. We’ve seen the cost of genetic screening fall to a point where people are paying for tests for less than $100, compared to the mapping of the genome project that cost billions of dollars 20 years ago. This might not translate immediately, but it lowers hurdles to build upon the work. A bigger question is whether genetics will take health care in the same pattern of lower costs that we’ve seen in computing, which an entire room of computing power in the 1960s is now capable of being contained in a phone at a fraction of the cost.”
In addition, he says, “the next 10 years will see the medical profession expand toward greater expertise around genetics and the ability to understand the role of nucleic acid-based therapeutics (e.g. mRNA, gene therapy and modified cell therapies). We’re still at the beginning of this growth cycle; as such, the wave of new therapies will require educational growth in the medical field.”
“Payers are attentive to therapeutic areas that in the past have been treated with more traditional oral therapies and are now advancing into more specialty and medical benefit treatments, such as injections and infusions,” explains Mourad. “These garner increased reviews, as payers need to weigh the benefits of more complex and costly therapies compared with existing treatments.
“The future of medicine is promising and continues to be a whirlwind,” she continues. “COVID-19 has dominated the headlines currently, and that will continue for some time. Gene and cell therapy, as well as genome editing, will advance and garner much attention. The oncology pipeline has and will dominate in the future as new treatments, including cancer vaccines, as well as new and expanded indications, are approved at a pace that is often difficult to keep up with. Neurology, immunology and rare diseases also have very promising and significant pipelines.”
Ultimately, states Mourad, “manufacturers, payers and other stakeholders can collaborate to further promote market access and deliver patient care, and this includes clinical program development between payers and providers, as well as innovative contracting opportunities. Manufacturers should truly understand payer needs and understand that different payers will have different needs. This applies to other stakeholders as well in ensuring that the needs of each are understood to help define industry strategies. Manufacturers, in turn, can use these insights to further advance their trials and focus on ensuring study outcomes are meaningful for the end user. High drug prices are a key focal point for payers, patients and regulatory bodies, so developing the true need and substantiating the economics will continue to be a challenge that manufacturers will face.”
Contact Agarwal and Corvino through Ellen Conti at email@example.com, Mourad through Tess Rollano at firstname.lastname@example.org and Stoll through Bill Borden at email@example.com.
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