By Jared S. Hopkins
Drugmakers are experimenting with new ways to get paid for their
most-expensive medicines, as resistance to escalating prices builds
and improvements are made in collecting and analyzing patient
data.
Now that six-figure price tags are common, drug companies are
finding creative ways to get reimbursed, from installment plans to
subscriptions to more complex value-based contracts that tie
payment to when a drug helps a patient. For years, pharmaceutical
companies would typically set a price for a drug and then get paid
per pill sold at that price, less any negotiated rebates.
Alnylam Pharmaceuticals Inc. now will charge full value for a
nearly $600,000 new rare-disease drug only if a patient gets a
benefit akin to what was seen in clinical testing, and it will make
the drug cheaper for insurers if they cover more patients than
expected. Sanofi SA is offering $99-a-month subscriptions for
insulin. Novartis AG -- which sells a gene therapy at $2.1 million,
the most expensive drug in the world -- is giving insurers the
opportunity to pay over five years.
The drug-reimbursement innovation comes as cries for relief
mount. Congress is considering plans to lower drug costs, while the
Trump administration has proposed importing drugs from Canada.
Earlier this month, drugmakers raised prices of hundreds of
prescription medicines, The Wall Street Journal reported.
Meanwhile, health plans are controlling costs by restricting
prescriptions for certain high-price medicines to a narrow set of
patients.
Drugmakers "understand that if they come to the market with
superhigh-cost drugs and aren't willing to share the risk then they
are going to face pushback and access challenges," said Michael
Sherman, chief medical officer of insurer Harvard Pilgrim Health
Care.
It remains to be seen, however, how widely the innovative
reimbursement programs will be adopted. Many previous experiments
with installment-plan payments, for instance, were directed at
drugs for rare diseases, not at more widely used treatments.
Dr. Sherman and other health-insurance officials worry the new
efforts might give drugmakers cover to keep raising prices,
limiting the overall impact on costs.
Insurer Cigna Corp.'s most popular version of value-based
contracts refunds two-thirds of the cost to employers if a patient
ends up taking a different anti-inflammatory therapy within the
first 90 days -- which happens in 25% of patients, said Steve
Miller, Cigna's chief clinical officer.
Value-based contracting is "a great lever to pull, but it's just
one more tool in our toolbox," he said. "It's definitely not going
to revolutionize the system to make it more affordable."
A big factor driving drug companies to explore new payment
mechanisms, industry officials say, is rising employer, patient and
political pressure to control health spending, with some
prescription drugs costing hundreds of thousands of dollars a
year.
Caught in the middle are health plans: They are trying to keep a
lid on drug spending for employers while not inciting members by
denying coverage.
"For payers, there really is a challenge in wanting to pay for
these things," said Walid Gellad, a drug-policy researcher at the
University of Pittsburgh School of Medicine. "So if you can somehow
make it easier, it's going to be better for the payer and for the
manufacturers."
In November, Alnylam said it would calibrate the $575,000-a-year
price of newly-approved Givlaari, depending on how patients do on
the drug and how many take it. Givlaari treats acute hepatic
porphyria, an inherited liver condition in an estimated 3,000
patients in the U.S. and Europe that often requires
hospitalization.
Public and private health insurers that agree to participate in
the program will pay full value only if patients show a benefit
similar to clinical trials, Alnylam Chief Executive John Maraganore
said. The company also will charge less if more patients than
expected take the therapy.
The concessions may help Alnylam secure reimbursement from
health plans that otherwise might recoil at such a high price tag,
while maximizing prescriptions, Dr. Maraganore said. "We can work
together without creating misaligned incentives around the cost of
a new medicine." he said.
Sanofi in June expanded its $99-a-month subscription program for
insulins Admelog, Apidra, Lantus and Toujeo. Without the program,
uninsured patients taking Lantus might face an annual bill of more
than $4,000.
Sanofi said the program was used more than 52,000 times in
2019.
Novartis launched its gene therapy Zolgensma with an option for
insurers to pay over five years in equal annual installments.
Zolgensma treats an inherited disease called spinal muscular
atrophy.
Gene therapies treating just 11 conditions are projected to cost
$45 billion over the next five years and are "perfect candidates"
for value-based contracts, according to a research report by CVS
Health shared with The Wall Street Journal and that will be
published soon.
Such contracts, previously used sparingly in part because of
problems assessing how a patient fared on a drug, are becoming more
popular, industry officials say.
Digitized medical records, combined with technology to analyze
data and see how a patient does on a drug, is making it easier for
health plans and drugmakers to agree on metrics for pegging
payments.
Eli Lilly & Co. signed 15 such agreements with eight payers
last year, according to Frank Cunningham, who leads Lilly's managed
health-care services. He said some agreements are linked to whether
medicines successfully lead to patients showing up for work.
Amgen Inc. negotiated value-based contracts for migraine drug
Aimovig that reward the drugmaker for factors like reducing
emergency room visits, said Kave Niksefat, Amgen's vice president
and head of value & access.
"Tracking multiple metrics across multiple different health-care
systems is something that is hopefully the blueprint for the next
wave of value-based contracts," he said.
Write to Jared S. Hopkins at jared.hopkins@wsj.com
(END) Dow Jones Newswires
January 13, 2020 05:50 ET (10:50 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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