2
Mar
2020

Reconceiving the Value of Curative Therapies

Leora Schiff

I recently listened to Luke Timmerman’s excellent interview, Facing Up to a Political Crisis: BIO Chair Jeremy Levin on The Long Run. Levin spoke extensively about the existing crisis that the biotechnology industry is facing as a result of the public’s loss of trust in the industry.

His solution: companies need to focus on two core principles: innovation and getting innovative treatments to the patients who need them. Levin made the point that companies should focus, not on drug prices, but on demonstrating the value of our products in order to be able to deliver on these principles.

I completely agree. The only problem is the biotechnology industry has not had a great track record in doing this. It is getting better at it. However, there are structural hurdles in the way including the lack of the kinds of methodologies and data sets that we need in order to demonstrate comprehensively the full range of clinical, quality of life and health economic benefits that these innovative therapies provide.

For years I’ve been hearing complaints from people in the biopharm industry that their products don’t get credit for all the good that they do in terms of improving patient quality of life and productivity for society. Unfortunately, they haven’t had the data to back things up.

A Need for Cures

Last Friday, I attended MassBio’s Rare Disease Day. This annual event brings together rare disease patients and advocates and members of the MA biotech community to share successes, challenges and future directions. When I think of the patients who attend these events, they are the reason the biotech industry needs to focus on innovation and patient access.

Of the 7000 rare genetic disorders that have been identified to date, only a small number have any kind of treatment beyond symptom control and the management of health crises. However, technological advances including enzyme replacement therapy, RNA exon skipping and RNAi have improved the lives of many rare disease patients. Now, we’re on the cusp of a new age of potential cures.

Within the past couple of years, we have seen gene therapies for retinal dystrophy (Spark Therapeutics’ Luxturna), spinal muscular atrophy (Avexis / Novartis’ Zolgensma) and β-thalassemia (bluebird bio’s Zynteglo) reach the market. Between 30 to 60 new cell and gene therapies are projected to reach the market in the next ten years, with an estimated 350,000 patients receiving these treatments.

These are exciting times. However, with CAR-T therapies running roughly $400,000 and gene therapies at price tags of $1 million or more, this is going to be a shock to the system. If the price of the new therapies averaged out to a conservative $500,000, the cost of treating these patients would be $175 billion.

How can we possibly convince payers and society to pony up the money to cover these costs?

Reconceiving Value

When trying to assess a product’s value, QALYs are the measure that everybody loves to hate. Quality-adjusted life years are typical of any compromise approach – they capture all things poorly. Unfortunately, they are currently the best available measure of value that can be used to compare the apples and oranges of different treatments across the full spectrum of disease that payers face when making their coverage decisions.

For a while now, health economists have been wrestling with the issue of broadening the number of components evaluated in determining product value. In 2018, the Professional Society for Health Economics and Outcomes Research (ISPOR) put out a task force report that expanded the number of parameters of value beyond QALYs and budget impact to include:

  • productivity gains
  • adherence-improvement
  • reduction in uncertainty (if there’s a companion diagnostic)
  • fear of contagion for infectious diseases
  • insurance value (when baseline health is poor)
  • severity of disease
  • value of hope (when treatment results can’t be predicted)
  • real option-value (extending patient life so they can wait for new treatments to be discovered)
  • equity (fairness for all members of society)
  • scientific spillovers (new technology with applications to other indications)

But new value frameworks won’t be enough. We need methodologies for making appropriate measurements that everyone can agree to. Right now, we don’t have the robust methodological tools and stakeholder buy-in for this expanded value set to be put into action.

One More Factor for Our Expanded View of Value

I’d like to make a potentially controversial suggestion that an additional factor be taken into consideration when determining the value of products – financial toxicity.

“Financial toxicity” is a recent concept, but it has become increasingly familiar in current discussions of the costs of healthcare. First introduced into the literature by researchers at the Duke Cancer Institute in 2013, financial toxicity was described as “out-of-pocket expenses related to treatment. . . akin to physical toxicity, in that costs can diminish quality of life and impede delivery of the highest quality care.”

I suspect some of you reading this are starting to get concerned since the biopharma industry frequently has been attacked as the root cause of financial toxicity, but please hear me out. In the context of understanding the full value of the innovative products coming down the pike, this may be a much more important issue than you realize in making the value case for these new therapies.

We’ve all heard about cases of financial toxicity. Anecdotes abound in the lay press about how the skyrocketing costs of healthcare prevent patients from getting timely access to treatment, how patients cut back on essentials in order to afford their drugs or they cut back on their drugs to afford their essentials, how patients can be driven into bankruptcy by the cumulative costs of health insurance, medical care and drugs.

The stories are tragic. What is less clear is what the driving forces are of the financial stress on patients. It’s important to understand that disease-related patient costs go far beyond drugs and even direct medical care.

What I’ve Learned from Patient Advocates

Over the past year, I have had some amazing conversations with over a dozen rare disease patient advocates. Collectively, we have been trying to figure out how to gather data in order to get a handle on the impact of rare diseases on patients and their families.

These are some of the things I learned:

Patients with rare, degenerative disorders facing a lifetime of progressively greater, often life-threatening medical problems associated with huge financial costs. For these patients, costs will increase over time as they increasingly lose function, first requiring support to walk, then wheelchairs to get around and finally respirators just to breath.

The financial burden is not entirely attributable to direct medical costs. For these patients, many modifications need to be made to their homes in order to make things accessible or functional. They require physically supportive chairs and beds and modified cars or vans.  Special social services may be needed for education or financial and legal support. For patients who become agitated or who have poor muscle control, things often get broken and need to be replaced.

Once you picture these kinds of issues, it’s easy to see the ripple effect on families. For families, the burden of caring for a family member with one of these degenerative diseases may mean that one of the parents must work less or even give up their job completely. If they want someone to stay with their child, it’s not an issue of finding a babysitter. They need someone trained for the care of these patients. That’s expensive. Financial choices become difficult and families need to start making trade-offs. Money is often not available to save for college educations or retirement, or even to pay for basics.

In addition, caregivers of rare disease patients suffer health problems themselves because of the stress of trying to manage the impossible burden placed both on their child and on them. Divorce is common in families of rare disease patients, as the stresses of coping get beyond parents’ control. This can result with only a single caregiver struggling alone, or the separated parents having to duplicate costs of home caregiving across two homes. A diagnosis of a severe genetic disease can result in a negative prognosis not just for the patient, but for the entire family.

For patients fortunate enough to have available treatments for their rare disease, financial costs may still be burdensome. For treatments that are only disease-modifying or partially controlling (as in enzyme replacement therapies that fail to cross the blood-brain barrier and address the CNS impact of some diseases), progressive debilitation still occurs, albeit over a longer stretch of time, with associated medical and non-medical costs still occurring.

When it comes to managing the out-of-pocket costs of healthcare for these rare diseases, it is a case of haves and have-nots. For those with sufficient financial means and decent health insurance, or those with good state Medicaid coverage policies, this situation can be somewhat manageable. However, for those who fall between the cracks, the situation can be financially overwhelming and devastating. This includes patients who lack insurance or whose state Medicaid programs fail to provide the support they need.

The word among patient advocates is that there are “good” states and “bad” states when it comes to Medicaid policies and implementation.  Texas and Florida were specifically flagged as “bad” states with poor Medicaid support for rare disease patients. For patients in “bad” states who can manage it, many move to states with better Medicaid policies, so the “bad” states are effectively exporting the cost of caring for their rare disease patients to other states. Those who are left behind are just out of luck.

Financial Toxicity and Product Value

How does the issue of financial toxicity tie into our discussion of product value? I would argue – directly.

Imagine that a patient has a rare degenerative disorder with all the cost impacts described above. Now imagine a new cellular or gene therapy that can cure the disease before these costs ever happen. OK, we’re not sure that these treatments will eliminate the disease impact entirely or be durable but bear with me.

Assuming that these are curative therapies, they will have the following impact on families:

  • eliminate direct medical costs
  • eliminate non-medical costs
  • preserve their family’s social structure
  • increase the productivity of all family members
  • allow for savings towards future investments

In all, these cures will prevent the financial toxicity impact on the health and quality of life of patients and their families that was seen with the prior standard of care.

One of the biggest critiques of the healthcare system is the financial devastation patients and their families are subject to as a result of their care. If a treatment could do the opposite, preventing such financial devastation, the perceived value would be enormous and would go a long way to helping the biopharma industry regain the public trust.

Innovating Towards an Affordable, Sustainable Future

There’s only one catch – how will patients be able to afford these treatments?

If these new therapies are subject to hefty co-insurance requirements or onerous deductibles due to payer copay accumulator policies (that exclude payments from copay assistance programs from the calculation of deductibles or out-of-pocket caps), or if payers limit access to these therapies, then the potential for these treatments to eliminate financial toxicity will not be realized.

Many people in the healthcare industry have been trying to come up with innovative approaches to addressing the challenge of patient access to curative therapies. In many respects, reimbursement innovation is as important for the future of healthcare as any of the scientific innovations that companies are currently pursuing.

Over the past few years, biopharma companies and payers have entered into a number of value-based agreements (VBAs) that tie reimbursement amounts to drug performance, with manufacturers providing rebates if their drugs don’t meet specified outcome measures. In November, Alnylam Pharmaceuticals added a new twist to VBAs by adding a “prevalence-based adjustment” (PBA) which provides a rebate if the number of patients covered by the plan exceeds the projections based on epidemiological estimates (which are always problematic with ultra-rare diseases given the challenges with screening and diagnosis). The PBA provides payers with greater certainty in projecting costs in a way that is similar to the price-volume contracting used in France.

For gene therapies, companies such as Novartis and bluebird bio have been championing annuity approaches. Reimbursement for Novartis’ Zolgensma, priced at $2.12M, is based on an annuity plan of five more digestible payments of $425,000 starting with one upfront payment, the remainder being paid annually. For its β thalassemia therapy, Zynteglo, priced at 1.58M Euros (currently $1.72M),  bluebird bio went one step further with a combination annuity- / outcomes-based approach. In addition to the five payments of its annuity plan, bluebird’s VBA includes the provision that payers can stop payment if the gene therapy fails to meet its outcomes target.

These approaches are great for payers as they try to grapple with the cost and uncertainty associated with these innovative therapies. But what about the cost-impact on patients?

Manufacturers and payers have also been looking at the issue of how to shield patients from the costs of these therapies. When it began selling Luxturna, a gene therapy for an inherited form of retinal dystrophy, Spark Therapeutics decided to completely absorb patients’ out-of-pocket costs for treatment. For patients covered by commercial plans, Spark is paying for patients’ co-insurance for the treatment. In addition, Spark is providing support for all travel and other costs related to the treatment procedure so that “there should be zero cost to the patient for LUXTURNA and immediate follow-up care.”

Cigna, the health insurer, recently introduced Embarc Benefit Protection, a program whose goal is to help self-insured employers, unions and other payers cope with the costs of gene therapies and provide predictability in their budgets. Participating organizations pay a fixed monthly amount per beneficiary within their plans; in exchange, the program will completely cover the cost of gene therapies for its members. Under the Embarc program, patients will pay nothing for gene therapies covered by the program, although they may be responsible for associated medical costs. For 2020, the program will cover Luxturna and Zolgensma; additional therapies will be added in the future. While the details have yet to be firmed up, Cigna is targeting a fee of $1 per member per month.

In Closing

As a theoretical argument, the idea of innovative therapies being able to provide value by “curing” financial toxicity in addition to the diseases that are being treated is quite appealing. Unfortunately, we have a long way to go.

From a technical standpoint, “curative” technologies have to be true cures. We are still at the early stages of developing gene therapies. While trial results have been promising and the first of this generation of gene therapies are reaching the market, there are still critical questions regarding treatment durability, the extent of disease control, and safety issues associated with the different gene therapy vectors. It will be a while before we can say whether or not these gene therapies are truly “cures.”

I am an optimist – I think that these problems will be overcome with time. Just think of how long it took for the “magic bullet” of antibody therapy to evolve from promise to fully humanized monoclonal antibodies that have become a backbone of many treatment regimens. “One-and-done” gene therapies will likely need to go through a similar evolutionary process as the technology is successively refined, as well as our understanding of how to use these therapies.

From an evidence standpoint, data needs to be collected so we can compare the financial toxicity for populations of patients and their families before the introduction of a new therapy and afterward. We need to think about conducting studies I’m calling “natural histories of financial toxicity” along with natural histories of disease. This is something that I am currently working on and hope to provide an update report to TR sometime in the relatively near future.

The other innovation hurdle – reimbursement – may prove to be more challenging. While VBAs have been around for a decade, we are only now seeing the beginnings of reimbursement approaches that protect patients from treatment-associated cost exposure rather than crippling them with overwhelming cost burdens. However, I am optimistic about this as well. The healthcare industries collectively – manufacturers, payers, providers and other stakeholders – are among some of the smartest, most creative people on the planet. For the biopharma industry, innovation is in our DNA. We’re up to the challenge, if we set our minds to it.

Leora Schiff is the Principal of Altius Strategy Consulting. She can be contacted at lschiff@altiusstrategy.com.

An Acknowledgement

I would like to acknowledge the patient advocates who have shared their time and insights with me over the past year. In the process, I have heard heartbreaking stories of the severe challenges that patients and families face, and the financial devastation that many families experience. I have also gotten to know more about the community of patient advocates and they have earned my deep respect. These are entrepreneurs in their own right – they are passionate, mission-driven, hard-working, and open to opportunities to advance their goal of improving patients’ and families’ lives. Most are also burdened with the care of their own family members, juggling caregiver responsibilities, jobs and their advocacy. Nonetheless, they work tirelessly to find solutions for their patient communities.

 

Patient AdvocateOrganization
Kathleen O’Sullivan-FortinALD Connect
Monika JonesBrain Recovery Project- Childhood Epilepsy Surgery Foundation
Monica WeldonBridge the Gap – Syngap – Education and Research Foundation
Heidi GrabenstatterCDKL5 Community
Vanessa Vogel -FarleyDup15q Alliance
Steve SilvestriEveryLife Foundation
Christian RubioGlobal Genes
Scotty SimsKCNQ2
Tracy Dixon-SalazarLennox-Gastaut Syndrome Foundation
Mindy CameronLittle Hercules Foundation
Megan O’BoylePhelan-McDermid Syndrome Foundation
Kristin AnthonyPTEN Foundation
Mary Anne MeskisThe Dravet Syndrome Foundation
Jamie CohenThe Dravet Syndrome Foundation
Dena HookTuberous Sclerosis (TS) Alliance
Kari RosbeckTuberous Sclerosis (TS) Alliance

 

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