Considering Alternative Financing Methods for Expensive, Innovative Therapies

The rising cost of drugs is a cause for concern among various stakeholders in healthcare, some of who worry that staying on the current trajectory will “break the bank,” said panelists during a session at the ISPOR Annual Meeting.

The rising cost of drugs is a cause for concern among various stakeholders in healthcare, some of who worry that staying on the current trajectory will “break the bank,” said panelists during a session at the ISPOR Annual Meeting.

During the session “Are Alternative Financing Approaches Needed for Innovative Therapies?” panelists John Michael O’Brien, PharmD, MPH, of CareFirst BlueCross BlueShield; Krista M. Ward, MBA, of Express Scripts; and Mike Ciarametaro, MBA, of the National Pharmaceutical Council, discussed potential financing solutions and the barriers to each.

The high cost of drugs, to both plans and patients, has led O’Brien’s company to invest more into pharmacy care coordination, emphasizing the importance of adherence and getting the right patient on the right drug at the right time.

Ciarametaro ran through potential options, leading off by explaining by price controls are not the best way to address high-cost curative therapies since they have the potential for unintended consequences. Price controls have the potential to be arbitrary, plus within the United States there is no agreement on what the threshold should be, he explained. Plus, in the future, price controls could reduce the number of drugs that come to the market.

“It’s hard to image a scenario where the government swoops in and places a cap on prices,” O’Brien agreed.

However, there are other countries where the implementation of price controls has worked, but the impact of doing so in the United States would be more substantial, Ciarametaro said. Ward added that the idea of a price cap is a nice idea, but likely wouldn’t be enough.

“I think we need to look at how we are reforming the whole system,” she said.

There are various policy solutions being considered, such as reinsurance, which divides the cost across payers, drug mortgages, which allow the plan or patient to pay out smaller segments rather than a lump sum, and more. Ultimately, there are issues with each solution.

“Finding a workable solution is difficult,” Ciarametaro said. “No stakeholder exists in a silo.”

In the example of a drug mortgage, which has recently been suggested by some experts as a way to manage high upfront costs for expensive cures, there are questions about who pays the monthly bill and who holds the debt. And if the payer is paying the debt, does the debt follow the patients as they go from payer to payer?

Another proposal has been to create a health currency in which a health coin is issued to the payer, and the coin follows the patient from payer to payer. The new payer pays the prior payer the value of the coin, which depreciates over time. Unfortunately, such a system creates multiple budget issues, Ciarametaro said.

There is also the idea of government intervention through one of 2 ways, either through tax coverage or assistance—providing a subsidy or grant to a payer when they cover high-cost drugs—or through buying back the patent of a dug and selling the medicine at a discounted rate to the payer.

“Any of these solutions would require significant regulatory changes, but I think it’s a good problem to have, having hepatitis c [treatments] and these other curative therapies coming to the market,” Ciarametaro said. “Finding a solution … getting there is going to be painful.”