Download Fixed drug price method Pay by performance method

Can advances in health monitors lead to new
generation of pay by performance schemes?
Focsa S
Executive Insight AG, Zug, Switzerland
[email protected]
Introduction
Current and future advances in health monitors
As advances in health monitors are being developed the opportunity for them to
be integrated into daily healthcare infrastructure is also expanding. Many
healthcare systems are facing increasing budgetary pressure and are finding it
hard to make decisions about what treatments to cover. The willingness to pay a
fair price for the benefits of healthcare is present; however, the current
infrastructure and evaluation process has limitations. Patients can gain different
benefits from the same treatments and still incur in the same cost. Drug
evaluations are lengthy and complex processes, especially for those that have
multiple indications, subpopulations and formulations to consider. Market
restrictions of having one price per brand often lead to access restrictions not
allowing patients to benefit fully from the treatments available. Furthermore,
costs for noncompliant patients and adverse events are also covered by current
healthcare providers, meaning that the benefits gained per cost of treatment are
often not representative.
In recent years, there have been advances and increases in the number of ways we
can monitor how our bodies are performing. This coupled with a greater medical
understandings has created the opportunity for health monitors to be more
extensively used in the healthcare setting and potentially be used in measuring the
performance of drugs.
Fixed drug price method
Measures2,3,4&5
• Heart rate
• Temperature
• Physical activity
• Glucose monitoring
• Sleep
• Adherence monitoring (Otsuka’s Abilify®)
Methods2,3,4&5
• Skin (MC10)
• Contact lens
• Pill sensor
• Wearable activity bands
(e.g. Fitbit)
Continuous monitoring of patients could pave the way forward for scalable, accurate
and effective payment by result systems that will allow patient benefits to be directly
linked to the cost of treatment.
Typically drugs are launched in a sequence
were they can optimize price
Established and safer strategy
Patient
Benefits
Drug
Optimal drug prices achieved
Achievable price
Cost
Limited uptake in some indications
Access delays
Access restrictions
Not addressing patient unmet need
effectively
A
B
C
E
F
Indication
Launch sequence
A pay by performance system would incentivize
simultaneous launches into different indications
at different prices
Less established and riskier strategy
Indication A
Drug
Benefits
Cost
Achievable price
Patient
Low or no fixed price as a fall back
Less limited uptake across indications
Indication B
Indication C
Indication D
Indication E
Fewer access delays
Fewer access restrictions
Address patient unmet need effectively
Launch sequence
Pay by performance method
Limitations of pay by performance in the past
Conclusion
Previous and existing pay by performance schemes have had limited success or
market penetration due to the type of endpoints that can be measured and the
administrative burden put on healthcare systems, both in terms of measuring
performance of drugs and processing these through a financial system. Pay by
performance schemes have proved that longer term patient follow-up outside
the trial setting can reduce the uncertainties about dug performance and
outcomes of a drug; however, this is dependent on healthcare staff collecting
and processing data from patients1. Also, data collection for previous pay by
performance schemes has been limited to fixed time intervals not allowing for
fluctuations in the severity of the disease to be captured1. The use of hard
endpoints such as mortality, disease progression or even re-hospitalizations are
reliable proxies of drug performance but they are limited to a number of
diseases and sometimes require the use of specialized diagnostic equipment
coupled with an accurate and reliable data capturing systems, something that is
not commonly available. Even when the right endpoints for a disease can be
measured and the tools and systems are in place, there is still a lack of incentive
for healthcare systems to contribute time, money and resources to accurately
measure the benefit delivered by products from manufactures.
If monitors can accurately evaluate the amount of benefit each patient gains
from treatment, they can effectively remove the need for drug pricing as a whole.
Only a cost per unit of health would need to be established and healthcare
systems would pay for the total benefits gained by the population, similar to how
electricity or gas is paid for using a meter. This change could allow drugs to
enter markets with fewer restrictions and be used optimally by physicians where
they feel they add the most benefit to patients. Furthermore, patient compliance
and adverse events would become the financial responsibility of the drug
providers, leading them to enforce monitoring, compliance and to incentivize
“on-label” use to provide the maximum patient benefits. Despite the potential
advantages of moving healthcare systems towards a pay by performance
model, there are still practical hurdles that would need to be overcome, including
deciding on the metrics by which performance is measured, changing the
mindset of payers and insurance companies as well as considering the
applicability across diseases and markets5. Generating such a change in the
industry is unlikely to come from governments or payers but could be an
opportunity for pharmaceutical companies to drive who have an interest in
delivering benefits to patients and also ensuring their products bring a return on
investment after achieving regulatory approval.
1 - Boggild M et al. “Multiple sclerosis risk sharing scheme: two year results of clinical cohort study with historical comparator“; BMJ; 2009; 339:b4677
2 - http://www.mc10inc.com/
3 - http://www.forbes.com/sites/robertglatter/2015/09/14/proteus-digital-health-and-otsuka-seek-fda-approval-for-worlds-first-digital-medicine/
4 - http://www.wsj.com/articles/novatis-google-to-work-on-smart-contact-lenses-1405417127
5 - http://www.bloomberg.com/news/articles/2015-10-08/drugs-could-soon-come-with-a-money-back-guarantee