ASCO Connection

July 2017

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invest additional resources in studies of a new drug after it has been approved to better understand its utility, whether to identify use at earlier stage of the disease, in a different tumor type, or for an even narrower patient population to avoid patient exposure when the risks are more likely to outweigh the benefits. For our health care system to truly pay for value, stakeholders also must be willing to develop creative reimburse- ment mechanisms that incentivize high- value care. Payment reform demonstra- tions are underway across the health care sector to explore better ways to pay for inpatient and outpatient care. To date, however, little has been done in the prescription drug space. Biophar- maceutical companies and payers — public and private—should collaborate to explore new, high-value reimburse- ment methods. These methods could include the following: Outcomes-based contracts. Biophar- maceutical companies and private payers have experimented recently with contracts in which payment for products is tied to achievement of cer- tain therapeutic goals (e.g., avoiding increased hospitalizations or increas- ing progression-free survival). These two sectors should work together to advocate removal of regulatory and legal barriers. Doing so would allow robust use of these promising tools to expressly tie payment to value. Value-based insurance design. Another nascent concept is value- based insurance design. Although this idea has been used in the context of outpatient and inpatient services, it has not been applied broadly to drugs. For example, an insurer could dramati- cally reduce cost sharing for high-value drugs or lower cost sharing after a patient experiences disease failure with a lower-cost medication. 6 These types of arrangements are still in their infan- cy but could help incentivize patients (government and otherwise), oncolo- gists, and patients; no one party can single-handedly solve the problem…. The authors of this article have each been asked to respond with a practical answer to the provocative hypotheti- cal question, "If you could propose one thing, and one thing only, in terms of an action or change by the constitu- ency you represent in this discussion, what would that be?" …We aim here to provide ideas to serve as starting points, both for introspection and to promote discussion. MR. MCCARTHY Pharmaceutical Industry Perspective INVEST ADDITIONAL RESOURCES TO IDENTIFY PATIENT POPULATIONS MOST LIKELY TO BENEFIT FROM THERAPY The idea of paying for value when it comes to pharmaceuticals is a widely accepted goal. However, there is still no consensus on what this means. Although this concept is still evolving, it relies at its core on biopharmaceuti- cal companies to demonstrate that the products we develop provide meaning- ful benefits to patient populations, cou- pled with a reimbursement system that lowers barriers to high-value products. Biopharmaceutical companies should do their part to invest more resources to ensure that the right product is available to the right patient at the right time. Cancer care is in the midst of an incred- ible transformation. Many cancers, pre- viously intractable, now can be treated with targeted therapies that greatly boost the chances of better outcomes for patients. Some patients experience long-term benefits from immunothera- pies. However, we still know too little about which types of patients are likely to respond best to a particular therapy. The pharmaceutical industry should and providers to use and prescribe high-value products. Transformation of our health care system to one that pays on the basis of value, not volume, will require coor- dination and cooperation across the sector. Biopharmaceutical companies should do their part to help demon- strate the value of our products to patients, payers, and providers. DR. NEWCOMER Payer Perspective REMOVE COVERAGE MANDATES FROM STATE AND FEDERAL INSURANCE LAW Insurance regulation forces payers to pay for any U.S. Food and Drug Admin- istration (FDA)–approved cancer thera- py in 42 states; Medicare has a similar provision. Such mandatory coverage eliminates any consideration of value. A therapy with mandatory coverage could be curative or could simply add 1 additional day of life, but the price can- not be negotiated if that therapy has an FDA-approved indication. The laws were well intended originally. As expen- sive therapies emerged, legislators were concerned that insurers would simply refuse to pay. The unintended consequence of coverage mandates becomes apparent when multiple thera- pies are available; payers cannot make decisions on the basis of the value of therapy and substitute one therapy for another when it is clinically appropri- ate. Removal of this legislated require- ment would open the marketplace, and pharmaceutical manufacturers would compete on price and outcomes. Pay- ers would compete in the marketplace by offering the best values for therapy within a competitive premium. This competition requires that a transparent and understandable set of criteria for determination of value, partial value, or no value is presented. The market could function normally. ASCOconnection.org I 23

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