Biopharmaceutical Report I
Value-based plans are emerging as particularly attractive coverage options for therapies that become available after an FDA accelerated approval. The lower amount of evidence that underscores such an approval provides an impetus to attempt alternative payment models, said two experts.
There is a real appetite to explore in the US warranties that are often seen in Europe, as demonstrated with a recently announced one with Pfizer’s (NYSE:PFE) Xalkori (crizotinib) for non-small cell lung cancer patients with a certain mutation. Another buzzy value-based arrangement was Takeda Pharmaceuticals’ (TYO:4502) risk-sharing agreement with Point32Health regarding ALK-targeted therapy Alunbrig (brigatinib) for NSCLC patients. The engagement of third parties to overcome any data-related challenges, and use of easy data points gleaned from pharmacy claims, is making the implementation of such plans possible.
Over the last decade, value-based reimbursement models have garnered a ton of interest at conferences and among academics. But challenges in building a data infrastructure that can identify outcome metrics and logistics to dispense payments have largely relegated these models to an anecdotal status. While these hurdles remain, experts have noted a few differences with the recent examples in value-based plans. These have included therapies that target patient subsets with certain cancers or orphan disorders, where long-term efficacy data is often scant when the drug is launched.
Larger healthcare plans with existing data capabilities do have an advantage, but even relatively smaller ones with an intent to invest in such plans are making headway in implementing value-based arrangements, experts noted.
Accelerated approval presents ideal stimulus
Value-based programs can be valuable regarding the immature data that supports an accelerated approval because they can build an evidence bridge for product use, said Jack Mycka, CEO, Medical Marketing Economics, an Indegene company, Montclair, New Jersey. Coupled with the high cost of rare disease products or oncology drugs, payers are concerned about whether there is enough data to demonstrate long-term efficacy in the case of accelerated approvals. This is especially relevant when it comes to gene therapies that have a high upfront cost, said Roger Longman, founder of Florham, New Jersey- based market-access advisory and platform company Real Endpoints. Value-based arrangements can help manage high-risk categories where there is an uncertainty about the economic impact, Longman said.
While he is working on value-based projects, Mycka said a therapy that has undergone accelerated approval would not automatically be part of such a program. Longman said his firm is also working on value-based solutions for therapies that have been through the regulatory pathway. Payers are certainly interested in these and so is biopharma, he added.
Despite the interest to use this tool, the implementation of such programs has been variable, but experts noted some emerging trends that signal change. The recent Pfizer arrangement for Xalkori is innovative in that it directly deals with patients and essentially acts as a warranty, Longman said. As per news reports, if Xalkori does not work within the first three months, Pfizer will refund the entire cost to any patient and health plan.
Ryan Cox, vice president, Access Experience team, Precision for Value, Oviedo, Florida, also made the distinction that Pfizer’s arrangement is relatively novel, considering it does not involve just rebates that are commonly used in payer deals, but an insurance payment of sorts. This scheme is going in the direction of shared-risk models that can creatively avoid impacting best price, he added. The Medicaid best price policy requires drug manufacturers to give Medicaid the best, or lowest price among nearly all purchasers. There has been a concern that this policy can affect insurer compliance with value-based arrangements.
"Value-based arrangements can help manage high-risk categories where there is an uncertainty about the economic impact"
In a crowded market, value-based plans may not be enough to give a competitive advantage from an access perspective, but it may keep the drugs at parity price, Cox said. In the case of Alunbrig, however, a payer will have a reimbursement incentive to prefer Alunbrig versus another, said Longman, who worked on the Takeda/Point32 deal. If a drug does not work for a patient, then the manufacturer would need to reimburse the payer, making it cost less than similar drugs that do not have such a value-based arrangement, Longman explained.
Cox also referred to another value-based program involving the targeted therapy for Bayer’s (ETR:BAYN) NTRK gene fusion inhibitor Viktravi (larotrectinib), which also entered the compendium through an accelerated approval. Under the payer-agnostic deal, which was announced a few years ago, Bayer will refund up to 60 days worth of treatment if a patient does not benefit from the drug, as assessed by a physician.
It is difficult to adjudicate a deal based on subjective, qualitative assessments like radiographic test results, Longman said. This has been one of the challenges when it comes to wider use of value-based arrangements. On the other hand, pharmacy claims data can be a straightforward data point to use to judge treatment efficacy, Cox said. If a patient discontinues a drug, that would be noted in the claim system. A health plan can access a pharmacy claims database and can track doctor visits, blood tests and prescription continuation, Longman said. Since a number of these drugs are orally administered, including Xalkori and Alunbrig, pharmacy claims data can be analyzed in real time to fit with a value-based plan, Cox said. There may be some delays when it comes to medical claims, on the other hand, he added.
However, Jakub Hlavka, PhD, research assistant professor, Health Policy and Management, USC Price School of Public Policy, Los Angeles, pointed out that issues arise even with claims data, due to incorrect coding.
Both Xalkori and Alunbrig got their initial regulatory nods via accelerated approvals in 2011 and 2017, respectively. While Xalkori is currently approved for ALK+ or ROS1+ subsets, Alunbrig is indicated or ALK+ NSCLC.
Individual determining factors like plan size
Over the last decade, some payers have built the administrative infrastructure and data capabilities to engage value-based programs, said Cox. Larger national plans like Humana (NYSE:HUM) and Anthem Blue Cross Blue Shield (NYSE:ANTM) have their own data companies, and such entities may have access to pharmacy and medical claims data that others do not, he added. Administrative barriers do exist for those smaller players who did not build this infrastructure.
That said, some like Harvard Pilgrim Health Care have been on the forefront of exploring such alternative plans with other products for a long time, Mycka said. It isn’t the biggest plan but is sizable in Massachusetts. Point32Health, which signed the Takeda deal, is a combination of the Tufts Health Plan and Harvard Pilgrim.
"Considering highly regulated data-sharing requirements, that can bring challenges of data privacy"
Payers that don’t have extensive data capabilities can always employ third parties that can capture and analyze data for such value-based arrangements, Longman said. However, considering highly regulated data-sharing requirements, that can bring challenges of data privacy, Cox said. There is a need for greater transparency in the structure of these plans, but regulatory factors like the Medicaid best price rule that can influence price negotiation restrict that, Hvlaka said.
Value-based arrangements need to be used selectively such that they reach patients in an effective way, said Ed Schoonveld, managing principal, Value & Access, ZS Associates, Princeton, New Jersey. It’s not a one-size-fits all approach and there is much investment needed to make them function, Mycka added.
Associate Editor, New York
Manasi Vaidya has a Masters degree in biotechnology. After a stint in a research lab, she spent two years as correspondent in India for BioSpectrum, a publication focused on the Asian biotechnology industry. She then moved to the United States to pursue a Masters degree in Science, Health and Environmental
Reporting at New York University. Manasi has reported primarily on topics that combine health and policy, and her work has appeared in Nature Medicine, Nautilus and Scienceline. Her coverage at BioPharm Insight focuses on cancer.