Innovative Pricing and Reimbursement Schemes – The What, Why, Which, and How

• Published in: Value in health 2017-10, Vol.20 (9), p.A403-A404
• Main Authors: Macaulay, R, Hettle, R
• Format: Article
• Language: English
• Subjects: Affordability; Complexity; Health care expenditures; Infrastructure; Inpatient care; Investments; Leasing; Life expectancy; Life span; Lymphocytes T; Medical treatment; Multiple sclerosis; Patients; Purchasing; Reimbursement; Risk management; Savings; Treatment needs
• ISSN: 1098-3015; 1524-4733
• DOI: 10.1016/j.jval.2017.08.034

We are at the advent of a new era of therapies which offer potential transformative/ curative patient benefits in areas of severe unmet need after a single treatment (e.g. CAR-T cell and gene therapies). These offer the potential for significant healthcare system savings through reduced medium/long-term costs of patient care, but are likely to come at a substantial acquisition cost (per patient costs estimated to exceed $500,000). In the traditional approach for medicine reimbursement, payers are purchasing health care {e.g. treatment for disease) rather than health (e.g. extended life expectancy). For such transformative therapies this would mean a substantial upfront investment from healthcare payers alongside the significant risk that real-world patients do not obtain the expected benefits, especially as many will likely be approved on early clinical data through expedited regulatory pathways. Therefore, there has been a move towards exploring innovative types of reimbursement, including leasing, performance-based reimbursement, budgetary caps and dynamic pricing. These schemes can offer means for payers and manufacturers to agree coverage by sharing risks and managing affordability but they also involve additional complexity and costs in terms of management and administration. Each of these schemes offers distinct opportunities and risks for both manufacturers and payers with the simpler ones (e.g. budgetary caps) being cruder in how they manage risk/payment but being relatively simple to administer and the more complex ones (e.g. performance-based reimbursement and leasing) being potentially fairer in managing risk/payment but this may be outweighed by the associated complexities/ costs. Indeed, there have been some notable examples of where such complexities have fatally undermined such schemes (the UK Multiple Sclerosis Risk Sharing Scheme and Conditional Financing in the Netherlands). There will not likely be a best-in-class scheme but different ones will be utilised depending on the health system infrastructure and the specific therapy, manufacturer and patient population.