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Are Orphan Reinsurance and Benefit Managers the Future of Financing High-Cost Therapies?

Kelly Davio
Researchers at the Massachusetts Institute of Technology (MIT) New Drug Development Paradigm (NEWDIGS), an entity that brings together global leaders in a program that designs, evaluates, and initiates advancements that are too complex to be addressed by individual organizations, are working to solve the problem of ultra–high-cost treatments, including gene therapies.
While all stakeholders can agree that the challenge of paying for ultra–high-cost treatments, including gene therapies, is a daunting one, little consensus exists as to which financial solutions may be feasible.

Researchers at the Massachusetts Institute of Technology (MIT) New Drug Development Paradigm (NEWDIGS), an entity that brings together global leaders in a program that designs, evaluates, and initiates advancements that are too complex to be addressed by individual organizations, are working to develop solutions to the problem.

Among NEWDIGS’ projects is the Financing and Reimbursement of Cures in the United States (FoCUS) project, which is evaluating the feasibility of a new management entity, an orphan reinsurance and benefit manager (ORBM).

The ORBM, says FoCUS, is an as-yet hypothetical organization that would develop expertise in managing patients with rare diseases that are challenging for payers to manage. Under an ORBM, disease-related treatments for rare diseases would be carved out by the primary payer in return for a capitated payment based on the size of the primary payer’s plan. The ORBM would manage performance and financial risk by contracting with the treatments’ developers, adjudicating and paying claims, and coordinating patient care.

In an interview with The American Journal of Managed Care®, Mark Trusheim, MSc, strategic director of NEWDIGS, explained that the ORBM may provide a way for individual payers—and especially smaller payers—to ensure that they have appropriate infrastructure in place to provide care for a member who is identified as having a need for a rare disease therapy.

According to Trusheim, “It’s a matter of scale…The concern [is], without an entity like the ORBM, individual payers, particularly smaller payers, may not consider how to contract for these therapies until they see a child with the condition appear in their system, and then it would be a bit of a rush to get everything in place.” He added, “We were concerned that could inadvertently delay care; it wouldn’t be that payers were consciously trying to obstruct care. It’s just in their operations, having contracts preemptively in place for an event that may only happen once every many years is unlikely to get to the top of the to-do list for the contracting groups.”

Trusheim explained that, “We thought having an entity that could consolidate, in essence, the patient populations of many of these payers into a larger pool would give this ORBM both the incentive and expertise to work directly with the developers and the physician networks to have everything ready so that when a patient is identified with one of these rare conditions, everything is set up and ready to go.”

The ORBM model may also help solve the problem of patients moving in and out of health plans; if a therapy is paid for under a performance-based contract, there exists a need to track patients if they move among plans when they relocate or change jobs. Because the ORBM would have a larger scale and coverage than any individual insurer would, plans may be able to transfer patients within the existing ORBM network. Or, alternatively, if there are eventually several ORBMs operating in the United States, a set of rules and approaches for transferring patients could be agreed upon.

“We look to analogies with the airline industry where they have known for decades now how to transfer tickets from one airline to another every month as passengers have to with airlines at the last minute,” said Trusheim. “We envision something similar could be arranged in this space.”

Eventually, said Trusheim, it is likely that the United States will see ORBMs emerge from 3 different areas. First, large insurers have internal capability—and, as Trusheim points out, the balance sheets—to take on the risk that would be associated with an ORBM. Second, pharmacy benefit managers, which have contracting scale to deal with some of these therapies could extend their reach into care management. Third, existing reimbursement and stop-loss carriers may choose to get involved in contracting for these therapies.

From a regulatory standpoint, some hurdles remain. ORBMs would have to content with the federal anti-kickback statue, which could interpret rebates based on performance as being violations. Trusheim also sees the potential for challenges to arise from patients and payers who may wish to see outcome measures for therapies that differ from what the FDA has approved on the basis of clinical trials, potentially exposing a developer to an off-label marketing challenge. Finally, Medicaid’s best-price reporting system would need to be amended to address 4- to 5-year contingent payments rather than quarterly payments.

These challenges aside, said Trusheim, the excitement around ORBMs is in their ability to bring rapid patient access to many therapies that could otherwise be out of reach. If ORBMs can offer a smooth experience for payers, there exists an opportunity to give patients timely access to life-changing products, and to allow payers a way to plan ahead to cover these therapies.

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