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decisions of payers—should funding for a technology in a particular indication be introduced, maintained, limited, or withdrawn?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
The value-engineered translation (VET) framework was designed to evaluate translational candidate biotherapeutics for their potential to clear value-based reimbursement hurdles.18 It comprises 3 distinct steps along the translational continuum—headroom analysis, macro analyses, and micro analyses—as shown in Figure 1. It provides developers with information at specific points in the process to inform “go-no-go” and research prioritization decisions. For technologies that clear all 3 stages, the framework provides a reimbursement portfolio to incentivize investment in, and inform design of, costly phase 3 clinical trials. The portfolio is a starting point for designing the final evidence package to submit to HTA agencies for reimbursement decisions.
This discussion will focus on the first phase. It comprises a headroom assessment, which integrates considerations of the health and resource impacts of a candidate technology and whether social values might modify our assessments of those impacts. The second and third phases of the VET framework are based on the availability of more specific evidence and comprise increasingly sophisticated economic models to assess the likelihood of clearing market access hurdles, along with the value of alternative R&D investments and their impact on that likelihood.
Headroom analysis evaluates any unmet need for a candidate technology for a specific indication to support a price consistent with an acceptable return on the investment in clinical translation (Figure 2). In other words, it considers the scope for therapeutic or health system benefits of a technology relative to other existing technologies or those expected to be on the market at the time of product launch. This phase may commence as soon as a technology or indication dyad has been specified. It first assesses the maximum health gain that could be achieved if a new therapy restores the affected individual to his or her full health, with consideration for age and gender. However, if existing therapies are successful in restoring a patient’s health, then it will be very difficult for a new therapy to justify a premium price on the basis of health delivered.
Fortunately, in a value-based decision framework, improvements in the cost of care are also valued, as they reflect potential health gain for other people served by the health system. Thus, the second component of the headroom assessment considers whether the candidate technology could achieve savings elsewhere in the system that would be valued by the budget holders, as releasing resources to provide healthcare to others.
The final component of the headroom assessment contemplates whether the characteristics of the technology, the disease, or the affected population would modify the value of the health benefits or resource savings for the decision maker. For example, many jurisdictions incentivize technology development for rare/orphan diseases and for pediatric populations.
The assessment of headroom draws upon insights from clinical landscaping, which maps how the condition is currently managed in target healthcare systems, and technology landscaping, which draws upon patent, clinical trials, and trade and publications databases to identify potential competitor technologies likely to be on the market at the expected time of product launch. The former assessment specifies current headroom and the latter determines the likely headroom at the time of market access. Combined, these analyses determine whether the technology is likely to be a first to market, a fast follower, or a me-too, all of which would influence the ability of a developer to command a premium price.
The final component of the headroom assessment combines the methods of evidence synthesis and Bayesian expert elicitation. It examines the preclinical and early clinical data for evidence of publication bias, which forms the basis for adjusting expectations about the scope of the new technology for “over-confidence” bias.
Why Should Health Technology Developers Consider Headroom?
Here, we present retrospective and prospective examples of how early analysis of headroom may aid in decisions along a translational continuum. The first example illustrates the need for analysis of future market prospects—technologies may fail close to clinical adoption if the expected health benefit shrinks at the time of market entry. Vitravene (fomivirsen), an antisense therapy developed at the National Institutes of Health and licensed by Isis Pharmaceuticals, Inc, was approved by the FDA in August 1998 to treat cytomegalovirus retinitis (CMV-R). During its development in the 1990s, AIDS had transformed CMV-R from a rare disease into one of the most common ocular infections in the United States. When approved for use, Vitravene was a biomedical breakthrough as the first FDA-approved antisense therapy. While Vitravene was in phase 3 clinical trials, Highly Active Anti-retroviral Therapy (HAART) regimen, the “3-drug cocktail”, was developed to suppress HIV replication and allow the immune system to recover. As a consequence, the number of new cases of CMV-R declined by nearly 75%. When Vitravene reached the market, distributed by Novartis Ophthalmics AG, HAART had been standard therapy for about a year. New cases of CMV-R were less common, and many existing cases no longer needed treatment; in other words, the health crisis that Vitravene was designed to address had receded and sales of the product were much lower than predicted. As a result, Novartis no longer markets Vitravene, but Isis Pharmaceuticals still cites Vitravene as evidence of its “ability to meet FDA and European regulatory requirements for safety and efficacy, and for the commercial manufacture of antisense drugs.”19
The second example illustrates that delays in evidence development for regulatory approval and legal rights may lead to a loss of headroom if they enable a competitor to enter the market, making a therapy a fast-follower rather than a first-in-class. In 2008, Abbott Laboratories (now AbbVie) began marketing an anti-TNF-alpha human monoclonal antibody, Humira, as a therapeutic for anti-inflammatory disease, including psoriasis. The antibody was derived from a phage display library obtained from Cambridge Antibody Technology (CAT).20,21 Abbott disputed the royalty payments to CAT on products it developed from antibodies it had licensed. Abbott lost the court case in 2004, resulting in royalty payments to CAT of 5% instead of 2% on net sales.22 At the same time, Abbott was developing another anti-inflammatory therapeutic, anti-IL-12/23 human monoclonal, briakinumab, also obtained from CAT. Despite Abbott’s positive phase 3 results in 2009 for treating psoriasis, the FDA demanded additional data.23 Later that year, Centorcor Ortho Biotech Inc (now Janssen Biotech) received FDA approval for its anti-IL12/23 monoclonal StelaraTM (ustekinumab).24 In 2011, Abbott announced it had withdrawn its application with the FDA and the European Medicines Agency for briakinumab, partly because of a competitor and in part to avoid competing with its existing market for Humira.25
The example of 2 FDA-approved recombinant Lyme disease vaccines from the late 1990s illustrates the potential negative impact of social values on headroom for a technology. While social values can lead decision makers to approve technologies that would otherwise not be considered cost-effective, they can also produce a contrary effect. In 1998, FDA approved SmithKlineBeecham’s (now GlaxoSmithKline’s) LYMErix. Pasteur Merieux Connaught (now Sanofi) conducted phase 3 trials of its vaccine ImuLyme at the same time, but never applied for FDA approval. LYMErix trials demonstrated only 76% efficacy and required 3 doses. Additionally, it was approved for a restricted population: persons aged 15 to 70 years who lived in endemic areas and who engaged in activities with frequent exposure to ticks. After 1 year on the market, reports of adverse events began to appear and the media covered stories about “vaccine victims.” A class action lawsuit was filed against the company. While the FDA did not find a higher rate of adverse reactions among a small group who received the vaccine, some studies suggested HLA DR4+ patients who received the vaccine might be at a higher risk for developing chronic treatment-resistant arthritis. The FDA convened a public meeting in 2001 to discuss the risks and benefits of the vaccine. After a highly contentious discussion, the FDA made no changes to the use and labeling of the vaccine, but required the manufacturer to provide data from a phase 4 (postmarketing) trial. With all the negative publicity, sales fell off and GlaxoSmithKline withdrew the vaccine from the market in 2002.26
Our work with the regenerative medicine community is leading to greater awareness of cost-effective development of related technologies.18 Two current examples in regenerative medicine are Osiris Therapeutics Inc’s Prochymal, a stem cell therapy to treat steroid-refractory graft-versus-host-disease (GVHD), which was the first off-the-shelf regenerative medicine therapy to gain regulatory approval in Canada in 2012. The conditional approval, requiring ongoing collection of evidence, was only for children with the rare condition. No provincial health plan in Canada has approved reimbursement for the therapy—evidence that regulatory approval is no longer equivalent to market access.
The FDA approved Dendreon Corporation’s Provenge (sipuleucel-T) in 2010 as an autologous cellular immunotherapy for the treatment of asymptomatic or minimally symptomatic metastatic castrate resistant (hormone refractory) prostate cancer. However, Provenge has struggled since its approval due to its administration procedure and the cost. Physicians balk at the $93,000 cost of a course of therapy for an expected 4 month survival benefit for prostate cancer patients. Research found that 57% of physicians indicated a maximum price of $30,000 for this scale of benefit.27 Physicians were concerned with the ability of patients to pay or copay for expensive therapies, the need for preauthorization from insurance companies, and the minimal benefit to patients. At the time Dendreon sought FDA approval, Provenge was a first-in-class immunotherapy. However, the FDA required further evidence of efficacy, which delayed the launch. Now Provenge struggles for market share against rival drugs: Xtandi, from Astellas and Medivation and Zytiga from Johnson & Johnson. The company’s share price and workforce now reflect its decline in fortunes.
From a prospective standpoint, the key lesson for health technology developers is that reimbursement considerations influence all markets. An HTA framework that starts with an analysis of available headroom is valuable from an R&D investment standpoint only when supported by further economic modeling, as the evidence of safety and efficacy mount. For example, a simple plot of disease burden (patient population and potential health impact of the technology) plotted against existing and prospective technologies, is a valuable basis for R&D investments, from both funding and research career perspectives. For example, the headroom for an expensive stem cell therapy for myocardial infarction—with limited benefits for patient survival and quality of life compared to a plethora of existing technologies—is low when compared with an expensive stem cell therapy for severe sepsis or a treatment for triple-negative breast cancer, which present an increased health gain, especially when alternative therapies are lacking.
In conclusion, it is imperative for stakeholders in translational research—whether funding agencies that invest public moneys in health R&D, researchers who invest their careers, or industry that brings products to market—to consider uncertainties in clearing increasingly high reimbursement hurdles. A well-structured HTA does not lead to certainty in a changing environment, but it identifies risk factors and promotes investment in technologies with a high likelihood of successful clinical adoption and reimbursement.
Acknowledgments: The authors thank Mark Rohrbaugh, PhD, JD, director, Office of Technology Transfer, NIH, for contributing a few case studies of technology discussed in the manuscript and for his comments on the manuscript. The views expressed, however, represent only those of the authors. The authors also thank W. Luth, School of Public Health, University of Alberta, for editing the article.Authorship Information: Concept and design (TB, CM); drafting of the manuscript (TB, CM); critical revision of the manuscript for important intellectual content (TB, CM); administrative, technical, or logistic support (TB, CM).
Author Disclosures: Tania Bubela, PhD, JD, and Christopher McCabe, PhD, report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.
Source of Funding: This project was supported by the Canadian Stem Cell Network and the PACEOMICS project, funded by Genome Canada, Genome Quebec, Alberta Innovates-Health Solutions and the Canadian Institute for Health Research (CIHR). CM holds the Capital Health Endowed Research Chair in Emergency Medicine Research and TB a McCalla Professorship at the University of Alberta.References
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