This client alert is the first of a three-part series that discusses hot topics to come out of the 2015 BIO International Convention.
Over the course of four days at the BIO 2015 Convention, there were at least half a dozen sessions and countless speakers directly and peripherally addressing issues of personalized medicine, including reimbursement, diagnostic development, genetic-based therapies, and legislative activity.
There is general recognition that as medicine becomes more tailored to the individual—whether through tumor analysis, pathogen sensitivity testing, or predicted drug response—cost of care and cost per treatment will rise, with treatment courses over time reaching hundreds of thousands of dollars, if not millions. This sets up an interesting conundrum in that while the bio-pharma sector, including diagnostic developers, are focusing on both incremental and monumental improvements in therapeutic outcome, when those transformative therapies emerge (cures for conditions previously treated via chronic therapy, for example), there is hand-wringing about the most appropriate way to pay for such care, if at all.
These questions and discussions are relevant to the patient, the payor, and the provider, because these decisions will impact all sectors. The patient will need to be their own best advocate for their therapeutic options. This personal advocacy is critical, as one panelist stated it, “to ensure that tailoring of treatment leads to prioritization of options and not exclusion of options.” The provider of care is approaching a time in which reimbursement for the treatment options selected is based upon the response of the patient. This future model of reimbursement focuses on limiting provider reimbursement to a defined minimal level upon delivery of a therapeutic to a patient, and then only fully reimbursing the provider should a patient respond positively to that therapy. This is likely to put the desires of the patient and the financial risk of the provider in direct conflict. Finally, payors are facing new treatment options that are based on a cure rather than long-term chronic care, which is now the case for Hepatitis C. In this situation, both the long-term financial cost savings and significantly improved health outcomes are well established, but due to the predictability of chronic care, current insurance models are insufficient to account for the high cost of the cure. Novel insurance and reimbursement models are widely recognized as being needed, but there doesn’t appear to be consensus, beyond current approaches such as bundling, around how best to manage these forthcoming costs. Those with the best IT infrastructure to power supercomputing of data are likely going to be the leaders in this area.
For those developing products for these 21st Century Cures, as they are known both in the industry and the leading legislative activity on the Hill, the emerging theme is the need to be proactive about addressing health outcome and improved health benefit over existing standard of care. It is widely recognized that while it may be possible to get a new product approved by a regulatory authority, how (or even if) that product will be covered is going to be tightly linked to a significant improvement in health outcome. While this does seem to be a laudable goal, it again sets up a scientific tension in that it is often incremental (and possibly modest) improvements that lead to a significant scientific advance. Many in the bio-pharma sector suggest that if those incremental improvements are not covered or reimbursed, the transformative achievements have no base upon which to build and thus will never come to fruition.
A final thought about the emerging therapeutic landscape is based on questions about value: “What is value? To whom and at what point in time? What is the best way to recognize value and how does it change over time?” It is relatively simple to understand value in this moment, but allowing for investment and growth, change in value over time is difficult to predict and difficult to codify. With nascent scientific technologies, whatever models of treatment and reimbursement emerge, it is critical that they are flexible enough to account for both the needs of the patient and the financial needs of the industry. How this will be done remains to be seen, and is open for discussion and influence.