A New Strategy for Payers to Cover High Cost Specialty Medications?

A new analysis published by the RAND Corporation suggests strategies that the pharmaceutical industry could offer payers as they try to cover the front-loaded cost of newer breakthrough drugs.

In other industries, it is common for suppliers to encourage investment through approaches such as equipment leases or supplier-financed credit. Health care could learn from such approaches, according to Dr. Soeren Mattke, lead author of the analysis and a senior scientist at RAND, a nonprofit research organization.

Instead of paying upfront for the cost of a treatment -- $20 billion to vaccinate Brazil's 203 million people against dengue fever, for example -- a health system could issue debt instruments to the manufacturer. Those instruments could be structured as bonds, as mortgages or as lines of credit. Terms and interest rates would vary.

It's not unprecedented, even in the healthcare industry, researchers say. When hospitals need expensive equipment, they might lease it, or the supplier might offer a financial arrangement to help with the upfront cost.

"So it's not far-fetched for pharmaceutical companies to offer payers financial arrangements to ease some of the up-front costs," said Mattke, the managing director of RAND Health Advisory Services.

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