Innovative drugs and outcomes-based new reimbursement models: a necessity?

Innovative new drugs are often very expensive. These innovative drugs include for example advanced therapy medicinal products, such as gene and cell therapies, and all drugs and products linked to precision medicine. This allows for treating and curing diseases that were incurable until now. However, this innovation often comes at a high price. Literally, some of these treatments cost can even exceed one million euros per patient. This is for example the case of Zolgensma, a gene therapy drug from AveXis (Novartis) against spinal muscular atrophy approved in 2019 by the FDA. Such high costs obviously raise the issue of the capacity of national health insurance systems to finance these drugs, especially as they are often effective in some cases only. In a “volume-based” [1] reimbursement model, doctors could be hesitant to prescribe those selectively working drugs on high costs per patient if they are not sure that they would work. The development of those innovative drugs requires consequently to think beyond the traditional “volume-based” reimbursement model and to go towards an “outcomes-based” [2] reimbursement model in which expensive and selectively working drugs could be prescribed in more cases, even in doubt.

The outcomes-based reimbursement model for innovative drugs: a win-win model?

An outcomes-based reimbursement model consists of paying the drug manufacturer only if the treatment is a success and is able to produce positive outcomes on the patient health status. The drug is priced in line with the benefits they deliver to patients. There are several types of outcomes-based reimbursement models, examples are:

– Cost-sharing: in this case, it means that manufacturers offer a full or partial discount to payers on initial cycles of treatment for eligible patients.

– Risk-sharing: manufacturers offer partial reimbursement for the patients not responding to the treatment.

– Success fee: the payment is due to manufacturers only for patients who respond positively to the treatment.

– Payment by results: manufacturers reimburse the payers totally for non-responding patients.

The benefits of the outcomes-based reimbursement model for innovative drugs are numerous. First of all, it facilitates access to innovative and expensive drugs thanks to the acceleration of reimbursement negotiations between manufacturers and payers. Second, it creates a more collaborative environment between payers and manufacturers. Third, it offers more treatment options to physicians, and it brings more transparency of costs and benefits.

A shift happening in several countries and driven by the pharmaceutical companies themselves

Drugs manufacturers themselves have been at the forefront of outcomes-based reimbursement projects. Roche has launched for example the « Personalized Reimbursement Model » (PRM) in several countries. It aims at pricing medicines in line with the benefits they deliver to patients in different indications. Such a flexible pricing solution is supposed to ensure that patients can access innovative drugs on a sustained basis.

In France, some pharmaceutical laboratories are also paid for certain treatments according to their efficiency after performance-based contracts were signed with the French public bodies: for example a drug from Celgene against multiple myeloma which costs 8 900€ per month and which is efficient only in a third of the cases. A second example is a drug by Gilead against Hepatitis C which costed 41 000€ per patient for a 12-week treatment and which would have a significant added value for about 5% of HCV patients, some added value benefit for 35% of the patients and no additional value for 60% of the patients. .

However, one of the clearly most advanced countries in the implementation of an outcomes-based reimbursement model is Italy. Since 2006, the Italian Medicines Agency (AIFA) has been experimenting different performance-based contracts for certain types of drugs. One of the recent models put in place concerns a CAR-T cell therapy against leukemia from Novartis, Kymriah. The novelty lies in the payments which are made in 3 installments: upon enrolment in the treatment program, whilst treatment is ongoing, and in the 5th year of survival of the patient. Since 2019, the same treatment has been under a performance-based contract in Germany as well. The cost of the therapy (320 000€ per patient) is shared between the health insurance funds and Novartis.

A reimbursement model for innovative drugs which requires adaptation

While the model allows accelerated access to innovative therapies, it requires an adaptation of the healthcare system in order to be able to measure the benefits of the therapies on patients. The system requires close collaboration between drug providers and health structures in order to monitor patients in real time. The collected data make it possible to determine the number of people who do not respond to the treatment and the amount to be paid by health insurances or reimbursed by manufacturers. Those data must also be processed in a way that ensures patient confidentiality, which implies the intervention of a third party.

Moreover, it is necessary to clearly define the success criteria for a treatment between manufacturers and payers, but it is not as simple as it might seem. In the case of chronic diseases, the criteria might be unclear and leave much room for debate. In the opposite case, in oncology it seems easier to determine the success of a treatment. Survival over specified time periods is an uncontested indicator.

Furthermore, in such a reimbursement model, it is possible to estimate that doctors could start prescribing drugs without performing enough tests to potential patients. Last but not least, the price for a successful treatment would probably be even higher in a “outcomes-based” model than it would have been in a “volume-based” model if the pharma companies take full or partial risks of non-working treatments.

Such a reimbursement model is already a reality in several EU member states and, in the USA, where a lot of agreements are negotiated between the pharma companies and the payers. The model has also been gradually coming in China since 2014 where various manufacturers have tried outcomes-based schemes, but only focused on the self-pay market. This outcomes-based model has a lot of advantages but it requires undoubtedly to tackle some issues such as the massive collection of health data – which despite all the questions it raises could be used in therapeutic research – and the way the patient health is monitored. Alcimed is ready to support its clients in the challenges related to this ongoing shift!

[1] A “volume-based” reimbursement model pays the drug manufacturer according to the number of drugs prescribed.
[2] An “outcomes-based” or “value-based reimbursement model pays the drug manufacturer, not according to the number of drugs prescribed but according to the benefits they give to patients.

About the author

Diane, Senior Consultant in Alcimed’s Healthcare team in Germany