Payment Innovations Finally Catching up to Medical Breakthroughs
This week, the FDA approved Alnylam Pharmaceuticals’ ONPATTRO™ (patisiran), an innovative RNA interference (RNAi) therapy to treat polyneuropathy of hATTR amyloidosis. As you may imagine, this advanced, Nobel Prize-winning technology comes at a premium price, over $400,000 (list), according to the company. As part of the launch, Alnylam announced they have entered into or are negotiating performance-based agreements (value-based agreements) with large payers around the US. Thus, if the product does not provide enduring benefit to patients, the company will rebate part of the amount paid back to the insurer.
Likewise, the State of Louisiana recently solicited information from manufacturers of the effective, expensive Hepatitis C therapies about entering into a type of subscription arrangement. This payment plan would provide an anticipated number of doses for an annual fee so the state can dispense the medication as needed. Louisiana officials tout the benefit to the manufacturers as guaranteed income and the benefit to the state as the utilization of cutting-edge therapy.
These breakthroughs in technology required corresponding breakthroughs in payment and insurers seem to welcome it. We have known for a while that as new, very expensive therapies emerge on the market, payers have been grappling with ways to pay for them.
While we won’t know the details of the agreements for a while (or maybe ever, depending on the confidentiality of the contracts), these slivers of light are positive steps in a slow embrace of new therapeutic advances. It does not seem that payers have not wanted to pay for these costly products, it is just that their systems and processes have not been built to accommodate different payment mechanisms for them. In fact, in informal discussions with some payers, they have expressed eagerness to cover and pay for such products – they just are not sure what to do on their own. Thus, they welcome productive discussions and mutually beneficial suggestions from manufacturers who come to the table prepared to negotiate in good faith.
One idea I have considered (for when the opportunity arises) is a quasi-reinsurance agreement to mitigate the effect of members switching insurance plans while the insurer continues to pay for an expensive therapy for a patient. The insurer should not remain on the hook for a time-based payment – or even a one-time payment greater than a certain threshold – if a patient who is benefiting moves to another health plan. Perhaps there would be a way for insurers to pay into a fund designated for specific therapies and then withdraw from that pool as patients who were with one insurer switch to their plan. The details would need to be worked out, and no one has come running for such a solution – yet.
Your company deserves the same innovation in payment that these leaders are now developing. To discuss how to begin these cutting-edge strategies, contact me at email@example.com or 301 525 2321.