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Value-Engineered Translation: Developing Biotherapeutics That Align With Health-System Needs

Tania Bubela, PhD, JD, and Christopher McCabe, PhD
Research and development (R&D) of novel biotherapeutics must be driven by considerations of value to healthcare payers. In an era of cost-constrained health systems, those who make investment decisions in R&D for novel biotherapeutics must closely consider market needs and the necessity to clear market access hurdles.

Even in the United States, developers can no longer assume that the products and services they develop will be adopted and funded; payers may not reimburse innovative technologies at a price sufficient to generate a competitive return on the investment in R&D. It is no longer sufficient for developers to focus on clearing safety and efficacy regulatory hurdles. Meeting these evaluation criteria as technologies progress from preclinical testing through clinical testing is not indicative of whether the resulting technology represents a good investment from either commercial or health-system perspectives. Achieving regulatory approval is only indirectly related to criteria that determine reimbursement and health-system adoption of the therapy.1

Here we describe the Value-Engineered Translation (VET) framework that couples development decisions along the translational continuum with the production of a “reimbursable evidence dossier.” It assists technology develop-ers in comprehending the evidence requirements of healthcare payers, both public and private, in different markets. Concomitantly, it supports payers in evaluating a broader range of factors for novel bio-therapeutics that may address unmet healthcare needs. Finally it benefits the public and patients, who require better and more cost-effective therapeutics and diagnostics, by informing decisions on health insurance coverage and out-of-pocket expenses. We illustrate the utility of the framework with real world biotherapeutic development examples, noting that a similar analytical framework is applicable to therapeutics, ‘omics’-based diagnostics, combination therapies, or codependent technologies.

We begin, however, with a brief description of the changing health technology assessment environment. The Case for Health Technology Assessment in Major Markets Health Technology Assessment (HTA) is a process by which the evidence for the safety, effectiveness and value of technologies is systematically identified, critiqued, and synthesized. HTA informs the  reimbursement decisions of payers—should funding for a technology in a particular indication be introduced, maintained, limited, or withdrawn?

HTA dates back to the 1976 United States Congressional Office of Technology Assessment report, “Development of Medical Technologies: Opportunities for Assessment.”2 During the 1980s, HTA continued to develop in the United States, notably in the Blue Cross/Blue Shield Technology Evaluation Center (TEC) and its collaborative relationship with David M. Eddy, MD, PhD, of the Kaiser Permanente Care Management Institute, which began in 1993.

However, from the late 1980s to the present day, the role of HTA in health coverage has grown most rapidly outside the United States. HTA agencies operate at national and state/provincial levels in most countries with publicly funded health systems. Notable examples include the Canadian Agency for Drugs and Technologies in Health (CADTH); Australia, which requires economic evaluations to be included in submissions to its Pharmaceutical Benefits Advisory Scheme; and the United Kingdom National Institute for Health and Care Excellence (NICE), which has pushed the role of HTA in decision making with explicit decision criteria supported by increasingly sophisticated methods. To support technology developers, NICE now offers early scientific advice to companies to help them design studies and develop evidence portfolios that meet the needs of reimbursement agencies.

Similarly, in Europe, licensing authorities host joint HTA/regulatory scientific advice meetings with biopharmaceutical companies. As the European Union represents 27% of the global biopharmaceutical market, planning to meet the needs of HTA organizations, as well as licensing authorities, is an increasingly important component of pharmaceutical R&D and clinical trial planning. The United States has the world’s most expensive health system, with some of the poorest outcomes in terms of average lifespan and infant mortality among developed countries. Healthcare consumed 17.2% of the gross domestic product (GDP) of United States in 2012, and spending outpaced GDP by 2.0% to 2.3% from 1950 to the global recession in 2007, with some slowdown in the rate of growth since. The high rate of increase in healthcare expenditures is due to a combination of factors, many of which are likely to worsen in the coming decades. These include an aging population and the high cost of new technologies that do not necessarily improve health outcomes compared with existing standard of care. The greatest call on federal coffers comes from the Medicare and Medicaid programs. The former covers all citizens aged 65 years and older and some persons with disabilities; the latter covers individuals below an income cutoff. Medicare covered 46 million people in 2009, 33.2 million were enrolled in Medicaid, and an additional 150 million Americans were covered by private insurance, largely through their employers. The remainder of the population was uninsured.

While US law expressly prohibits CMS from considering cost-effectiveness in national coverage determinations (NCDs), its management stresses the importance of cost control. Jacqueline Fox describes an “open secret” in health policy—CMS considers cost when issuing NCDs.4 Indeed, one analysis suggests that coverage decisions are influenced by the availability of cost-effectiveness evidence,5 even though clear evidence of an implicit cost-effectiveness threshold was lacking.6 Fox calls for CMS to be given the power and obligation to develop transparent processes to consider the cost of new medical treatments before covering them,4 a call echoed in a 2014 report for RAND Health.1 This report further called for an alignment in incentives for development of safe and effective health technologies with incentives for the development of technologies that present the greatest value to health systems and patients. Of necessity, value implies considerations of cost-effectiveness.

Several recent developments support our contention that cost will factor increasingly into US healthcare markets. First, in the early part of this century, CMS publicly re-engaged with HTA, implementing Coverage with Evidence Development (CED), where coverage is linked to the collection of additional evidence to inform subsequent reviews of the coverage decision.7 CED was consistent with the development of conditional reimbursement programs in other Western healthcare systems since the mid-1990s.8 Access with Evidence Development is now recognized as the term of art for such systems.9

Second, the limitation on CMS to consider only whether a diagnostic or therapy is “reasonable and necessary” is largely restricted to hospital and physician services. Coverage of self-administered therapies, including some biologics, is determined by private sector insurance plans and additional state subsidies. These plans may supplement Medicare/Medicaid, be employer based, or be purely private, but all consider costs and many engage in HTA.10 For example, the TEC may be the most durable HTA program in the world;11 Washington State Health Authority operates an explicit HTA program;12 and the California Blue Shield Foundation has supported the California Technology Assessment Forum since 2003.13 More recently, a group of New England states (Maine, Massachusetts, Connecticut, New Hampshire, Vermont, and Rhode Island) established the Comparative Effectiveness Public Advisory Council (CEPAC) to support clinicians, patients, and policy makers in using comparative effectiveness information.14

Third, the Patient Protection and Affordable Care Act (ACA)15 established the Patient- Centered Outcomes Research Institute (PCORI), a nonprofit corporation, to conduct comparative effectiveness research in a manner that does not discriminate on a number of grounds, including against the elderly and the disabled. PCORI provides the secretary of Health and Human Services with information to compare the effectiveness of treatments, and cost may be an “outcome” measure in the information as long as PCORI does not make recommendations based on cost per quality-adjusted life-year (QALY) thresholds. Entities such as CEPAC support clinicians, patients, and policy makers in using comparative effectiveness information.14

The ACA has also influenced existing trends toward increased price sensitivity in health insurance.1 These trends include increased deductibles in many private insurance plans and declining prevalence of employer-based plans. Added to these are the ACA’s excise tax that targets generous employer-sponsored insurance plans, and the high cost-sharing rates in lower-premium plans offered on health insurance exchanges instituted by the ACA. With insurers now limited in denying coverage to those with pre-existing conditions, logic would suggest choosing the options of decreased coverage of expensive technologies and/or increased co-payment. The value of HTA and the innovative payment mechanisms developed under the Access with Evidence Development umbrella is that these provide evidence-based and tried-and-tested mechanisms for bearing down on technology costs.

Other initiatives target physicians to weigh the costs of care in their decisions.16 Both the American College of Cardiology and the American Heart Association have stated that they will integrate cost and value information in their guidelines, as has the American Society of Clinical Oncology. The guidelines will incorporate published evidence on the cost-effectiveness of interventions, increasing health price transparency. Finally, the ACA enables groups of providers of hospital and physician services, known as Accountable Care Organizations, to receive a share of efficiency gains if they meet quality performance standards.17

In this reimbursement climate, breakthrough technologies such as Vertex Pharmaceutical’s Kalydeco for cystic fibrosis, approved by the FDA in 2012, and Gilead’s Sovaldi for hepatitis C infection, approved by the FDA in late 2013, are experiencing substantial pushback from payers, due to the prices their manufacturers wish to charge. The former is specific to only 4% of individuals with cystic fibrosis with a specific gene mutation, and costs $307,000 a year per patient, well above most reimbursement thresholds. The latter is priced at $84,000 for 12 weeks and $168,000 for 24 weeks of treatment. It is yet to be seen whether new hepatitis C treatments about to enter the market, and discussion of combination therapies, will drive down the price of this drug.

Thus, value assessment is an increasingly real and immediate component of the market access process in the United States, as it has been for many years in other developed countries. The necessary corollary is that value assessment becomes part of the clinical translation process.

Value-Engineered Translation Framework

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