The Potential Benefits of Deferred Payment for a Hypothetical Gene Therapy for Congestive Heart Failure: A Cost-Consequence Analysis

• Published in: Applied health economics and health policy 2020-10, Vol.18 (5), p.669-677
• Main Authors: Hlávka, Jakub P., Mattke, Soeren, Wilks, Asa
• Format: Article
• Language: English
• Subjects: Beneficiaries; Budgets; Case studies; Cash flow; Clinical outcomes; Cost control; Costs; Gene therapy; Health Administration; Health Economics; Health risks; Heart failure; Hepatitis; Medical treatment; Medicare; Medicine; Medicine & Public Health; Mortality; Original Research Article; Patient admissions; Patients; Payments; Pharmacoeconomics and Health Outcomes; Property; Public Health; Quality of Life Research
• ISSN: 1175-5652; 1179-1896
• DOI: 10.1007/s40258-020-00563-y

Background The emergence of potentially curative pharmacologic treatments that deliver long-term clinical benefits with a limited number of doses may create short-term budget challenges for payers as their unit price can be high. Objective This paper tests the clinical and financial properties of a deferred payment model (DPM) in hypothetical therapy for congestive heart failure (CHF) from the perspective of payers, manufacturers, and patients. Methods We present an empirical analysis of longitudinal data for cardiovascular admissions and mortality using a Markov transition model for patient progression under different payment scenarios. The model calculates life-years gained and avoided cardiovascular admissions under the status quo and deferred payment and a hypothetical budget constraint. We tracked over 91,000 Medicare fee-for-service beneficiaries over a period of 5 years (2009–2014) using MedPAR 5% data files. Results We find that a DPM is associated with earlier treatment and a consequent improvement in clinical outcomes. A 25% down-payment is associated with the highest relative improvement and reduces hospital admissions by 0.52% (by 2611 vs. 2071 cases) and mortality by 0.29% (by 799 vs. 648 cases), both relative to the status quo payment. Deferred payment results in limited financial gains for payers or manufacturers, primarily because of the small share of expected cost savings on the total cost of therapy. Our results are robust to changes in relative risk for cardiovascular admissions and a change in the cost of therapy. Conclusions A DPM may result in faster access to CHF gene therapy and may thus reduce hospital admissions and mortality in contrast to a status quo payment with the same budget constraint. Although the financial benefits of a DPM in CHF gene therapy are limited, it is possible that deferred payments will show greater promise for treatments with higher cost offsets.